ConAgra Foods net income falls 12 percent on higher competition, inflation

Competition hurts ConAgra 1st-quarter net income

OMAHA, Neb. — Food maker ConAgra Foods Inc. said Tuesday that tight competition, inflation and a sluggish retail environment pushed first quarter net income down 12 percent.

The company reported that it earned $146.4 million, or 33 cents per share, for the quarter. That’s down from $165.9 million, or 37 cents per share, in the same quarter last year.

ConAgra says its revenue fell 2 percent to $2.82 billion from $2.89 billion in the quarter last year.

The results missed analyst expectations of 39 cents per share on revenue of $2.96 billion.

In the company’s consumer food segment, which accounts for about 65 percent of its revenue, sales fell 2 percent to $1.82 billion. Revenue was hurt by discounting in frozen foods, table spreads and popcorn.

That segment has benefited as consumers began eating at home more often during the tough economy. But ConAgra’s commercial division continued to see soft sales due to weakness in the restaurant industry.

In ConAgra’s commercial food segment, revenue fell 3 percent to $993 million. The company’s Lamb Weston specialty potato segment had higher sales and unit volume, but operating profit was hurt by a poor-quality potato crop a year ago.

However, ConAgra said the company begins processing a new potato crop during the second fiscal quarter, which will improve results “significantly” in the back half of the fiscal year.

The company predicted Tuesday that its full-year net income will rise 5 percent to 7 percent, pulling back from prior guidance of 8 percent to 10 percent growth.

That implies net income of $1.83 to $1.86 per share. That is short of the $1.89 per share analysts expected.

Shares fell 8 percent in premarket trading to $20.61.