ConAgra Foods Inc. (CAG) Thursday posted a 32 percent drop in quarterly profit from higher costs for fuel and transportation and falling sales dragged down by products like Hunt's ketchup and Orville Redenbacher's popcorn.

The maker of Swiss Miss hot chocolate, Peter Pan peanut butter and Butterball turkeys also said it expected profit for the second half of the year to be up from a weak year-earlier period, excluding one-time items.

ConAgra shares were down 1 percent Thursday on the New York Stock Exchange.

ConAgra has been conducting a review of its portfolio and operations to try to find ways to improve profits under new Chief Executive Gary Rodkin. The company plans to present its strategic plans to analysts on March 16.

Pablo Zuanic, analyst at J.P. Morgan Securities, said ConAgra stock could tread water until that analyst meeting, but cautioned that some things that could be announced might hit the stock after.

"We remain concerned that a potential cut to dividends, plus initiatives that may result in a lower EPS base leave downside potential for ConAgra shares," Zuanic, who rates the stock "underweight."

Retail margins could suffer initially as the company invests more in marketing and any asset sales could be dilutive, he said.

Net income was $163.1 million, or 31 cents a share, in its fiscal second quarter, ended Nov. 27, compared with $239.6 million, or 36 cents a share, a year earlier.

Excluding one-time items, earnings were 38 cents per share, matching the company's forecast on Dec. 5, which was 7 cents below the average analyst estimate at the time.

Sales fell 5 percent to 3.81 billion.

ConAgra shares were down 31 cents at $20.63 on Thursday morning on the New York Stock Exchange.

The stock trades at about 16 times fiscal 2006 projected earnings, compared with 16.4 percent for the Dow Jones U.S. Food Index.