OMAHA, Neb. – ConAgra Foods Inc. (CAG), one of the nation's largest food companies, said Tuesday its fourth-quarter earnings will be lower than expected, citing profitability problems with packaged meats.
The company's shares fell $1.18, or 4.6 percent, to $24.71 on the New York Stock Exchange (search), sinking below the low end of a 52-week range of $25.38 and $30.24.
Because improvement in packaged meats profits didn't occur, fourth-quarter earnings will be around 10 cents a share below analyst expectations, the company said in a news release.
Analysts surveyed by Thomson Financial had expected earnings of about 36 cents per share in the quarter, which ended May 29 and will be reported June 30.
The company said aggressive pricing management in packaged meats did not meet expectations but that it had taken more steps — personnel changes, cost controls among them — "to improve the packaged meat operations over time."
"Our fiscal 2005 showed a solid first-half performance, followed by a weak second-half performance, largely due to the challenges in our packaged meats business across retail, food service and deli channels," said Bruce Rhode, chairman and CEO.
The pricing management problems hurt the third-quarter earnings and continued into the fourth quarter, he said.
Prices had not kept pace with rising costs in the refrigerated meats segment, the company said Feb. 22 in its third-quarter outlook.
Tuesday's news release also said the company is keeping up with plans to cut expenses and improve efficiency by eliminating "several hundred salaried jobs" across the organization. ConAgra said that procees should be complete by August.