Milling & Baking News - September 7, 2010 - 20

Financial Results 

ConAgra Foods growth formula
centers on productivity, savings
OMAHA - Using a formula for
growth based on combining supply chain productivity and operational efficiencies with innovation,
great brands, selling and marketing,
ConAgra Foods Inc. said it expects
to increase earnings per share by 8%
to 10% a year over the long term.
"We generated strong shareholder returns during the year, and we
are creating more believers in the
future of ConAgra Foods," Gary
M. Rodkin, chief executive officer,
said in the company's 2010 annual
report issued recently. "Our formula for growth is straightforward:
use supply chain productivity and
tight overhead controls to fuel insights-driven marketing and selling and game-changing platform
innovation."
In the fiscal year ended May 30,
ConAgra Foods, Inc. posted net
income of $723,300,000, equal to
$1.63 per share on the common
stock, down 26% from $979,000,000,
or $2.16 per share, in fiscal 2009.
Sales for fiscal 2010 fell 3% to
$12,079,400,000. ConAgra attributed
the lower earnings to restructuring
and impairment charges, sluggish
sales and weaker performance in the
Commercial Foods segment. Operating profit was up 10%, excluding
items affecting comparability.
Operating profit for the Commercial Foods segment fell 0.7% during
the year, to $539,000,000, while sales
fell 8% to $4,077,500,000.
"Quite simply, fewer people eating at restaurants impacted our
Commercial Foods results," Mr.
Rodkin explained in the annual report. "But despite that, and on top
of one of the worst Northwestern
potato crops anyone can remember,
our Commercial Foods team held its
own and continues to be well-positioned for growth."
Mr. Rodkin said ConAgra expects
the company's new Lamb Weston
plant in Northern Louisiana to be a
"difference-maker" due to its position in the heart of the prime sweet
potato growing region.
Another way the company has
expanded its commercial opportunities is through its efforts with
whole grains. According to the
annual report, volume sales of
ConAgra Mills' whole grain products have increased 37% over the
20 / September 7, 2010 Milling & Baking News

past two fiscal years.
"Demand for whole grain products has increased as more and
more Americans have become
aware of the health benefits of eating three servings of whole grain a
day, which is what U.S. Department
of Agriculture guidelines recommend," ConAgra said.
While Commercial Foods was
challenged during fiscal 2010,
ConAgra's Consumer Foods segment flourished.
Operating profit for the Consumer Foods segment rose 17%

Rodkin

during the year, to $1,113,000,000,
while sales edged up narrowly to
$8,002,000,000 from $7,979,000,000
in fiscal 2009.
"Understanding value from the
consumer perspective was crucial
to growth in fiscal 2010," Mr. Rodkin said. "Dollar and unit share
gains for our aggregate Consumer
Foods portfolio were led by strong
performers in our top 15 categories,
which make up most of our business
and grew significantly faster than
our overall average. In addition to
our major players in frozen singleserve meals - Banquet, Healthy
Choice and Marie Callender 's - the
top 15 categories include a wide
range of our brands, from Hebrew National kosher beef franks
to RoTel tomatoes to Reddi-Wip
dessert topping."
Mr. Rodkin explained that
ConAgra's approach to innovation is, and will remain, simple and
different.
"We do platform innovation,"
he said. "That means we create

new concepts, new ways to prepare food, focusing on a particular
idea. Steaming, for instance. Our
new Healthy Choice entrees take
advantage of that platform and are
like nothing else in the frozen aisle.
Great for lunch, they feature largecut ingredients in packaging that
accents the fresh look and taste of
the food inside. Because we focus
on fewer, bigger, better innovations,
you won't see hundreds of new
products from us in a year. That's
by design, and it's the most effective
way to use our resources."
Mr. Rodkin also stressed ConAgra
will remain focused on health and
wellness concerns. He pointed to
the company's pledge to reduce
sodium across its total Consumer
Foods portfolio by 20% by 2015, as
well as the addition of more whole
grains and more protein to products, as examples of that focus.
Looking more broadly at the company's strategies, he said ConAgra
will continue to invest cautiously
in order to support its growth objectives. To that end, the company
earlier this summer divested the
dehydrated and vegetable product
operations of its Gilroy Foods business. That move followed the earlier
acquisitions of nutrition bar maker
Elan Nutrition and the frozen pies
and related products marketed under the licensed Marie Callender 's
and Claim Jumper names.
"Both of these purchases reflect
our acquisition strategy - find
businesses that are great fits and
enable us to grow by filling a need
within our portfolio or giving us an
adjacent category expansion," Mr.
Rodkin said.
All-in-all, Mr. Rodkin was upbeat
about fiscal 2010 and the stage it has
set for breakthrough performance
going forward.
"During fiscal 2010, supply chain
savings helped us realize a sevenday reduction in our cash conversion cycle and a reduction in
working capital of more than $300
million," Mr. Rodkin said. "That
contributed to operating cash flows
of $1.4 billion from continuing operations, up more than $400 million
in a single year. From FY11 though
FY13, we project supply chain cost
savings averaging $275 million per
year. Savings like this will help us
continue to combat input inflation
and fuel innovation, advertising
and marketing to grow our brands
and our customers' businesses." MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - September 7, 2010

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