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ConAgra 4Q Profit Jumps, Shares Rise
By JOSH FUNK,
AP
Posted: 2007-06-27 14:01:44
OMAHA, Neb. (AP) - ConAgra Foods Inc.'s fourth-quarter profit soared on strong results from its commodities trading division and a comparison with results a year ago that were depressed by restructuring charges.

The costs of recalling its Peter Pan peanut butter hurt ConAgra's latest results, but its shares rose 4 percent in afternoon trading.
The food company said Wednesday it earned $192 million, or 39 cents per share, for the quarter ended May 27 versus a profit of $59.2 million, or 11 cents per share, a year ago.

Revenue rose tgra recalled its peanut butter in February after federal health officials linked it to cases of salmonella infection. At least 628 people in 47 states were sickened, and several lawsuits have been filed against the company.
ConAgra plans to reintroduce Peter Pan in July. Initially, another company will produce the peanut butter for ConAgra because it doesn't expect to be able to resume production at its Sylvester, Ga., plant until sometime in August, after renovations.

The recall cost ConAgra about $66 million before taxes during the fiscal year and hurt peanut butter sales, which still generated about $92 million in revenue in 2007 versus $147 million in 2006.

Sales of ConAgra's consumer products generated $1.6 billion in revenue during the quarter. That is nearly equal to last year's results because of the peanut butter recall and the sale of the company's refrigerated pizza business. Excluding those items, sales were up 3 percent for the consumer products, which account for more than half the company's revenue.

ConAgra has begun introducing new varieties of Healthy Choice meals and other products. Rodkin said those innovations and other new products that will be introduced over the next year should help increase sales.

JP Morgan 's Zuanic questioned whether the company's new products and its plans to increase marketing spending by $75 million to $100 million annually will be enough to meet the company's predictions.

For the full year, ConAgra said it earned $764.6 million, or $1.51 per share, on revenue of $12.03 billion. A year earlier, it earned $533.8 million, or $1.03 per share, on revenue of $11.48 billion.

Rodkin said he expects the company's 2008 earnings per share will be near the $1.48 a share that analysts are predicting.

ConAgra's line of products includes several well-known consumer U.S. authorities include toxic fish, juice containing unsafe color additives and popular toy trains decorated with lead paint.

On Wednesday, three Japanese importers recalled millions of Chinese-made travel toothpaste sets, many sold to inns and hotels, after they were found to contain as much as 6.2 percent of diethylene glycol. The same chemical set off numerous recalls in other countries.

The chemical is a thickening agent used in antifreeze, and is also used as a low-cost - and sometimes deadly - substitute for glycerin, a sweetener in many drugs.

There were no reports of health problems stemming from the toothpaste. Chinese officials have said tests carried out in 2000 by Chinese experts proved that toothpaste containing less than 15.6 percent diethylene glycol was harmless.

Meanwhile, U.S. regulators ordered Foreign Tire Sales Inc., of Union, N.J., to recall as many as 450,000 tires after the company said an unknown number of light truck radials imported from Hangzhou Zhongce Rubber Co. could suffer tread separation.
The U.S. company, which has imported light truck radials from the Chinese company since 2002, said an unknown number of the tires it sold were made without a safety feature, called a gum strip, which helps bind the belts of a tire to each other.
Hangzhou Zhongce denied Wednesday that it supplied faulty products. In a statement, the company said its tires met U.S. safety standards and Foreign Tire Sales' specifications, accusing the U.S. company of making the claim to gain an advantage in a commercial dispute.
A nationwide crackdown on shoddy and dangerous products, launched in December, uncovered the 180 Chinese factories that were using industrial chemicals in food production, China Daily said.

"These are not isolated cases," said Han Yi, an official with the General Administration of Quality Supervision, Inspection and Quarantine.

The admission by Han, director of the administration's quality control and inspection department, was significant because the agency has said in the past that safety violations were the work of a few rogue operators, a claim that is likely part of a strategy to protect China's billions of dollars of food exports.

Han said most of the offending manufacturers were small, unlicensed food plants with fewer than 10 employees, and all had been shut down. China Daily said 75 percent of China's estimated 1 million food processing plants are small and privately owned.
According to Han, the ongoing inspections are focusing on commonly consumed food such as meat, milk, beverages, soy sauce and cooking oil. Rural areas and the suburbs - where standards are often less strict - are still considered key areas for inspectors, he said.