ConAgra Foods Inc. (CAG) reported fourth quarter EPS of 39 cents, down from 41 cents in the year-ago quarter due to a 5% decrease in operating sales. Reported EPS was a penny below the Zacks Consensus Estimate of 40 cents.
 
On a yearly basis, net revenues slipped 5.0% to $3,062.5 million from $3,224.3 million in the same quarter of fiscal 2009. The decrease in total revenue was due to a 6.3% decline in revenues from the Commercial Foods segment. However, revenues from the Consumer Food segment rose 3.0% year over year.
 
Revenues from the Commercial Foods segment decreased due to lower sales in flour mills. The increase in revenues from the Consumer Foods segment was based on continuous innovation, marketing and customer service initiatives taken by the company.
 
Corporate expenses were $106 million, up from $104 million last year based on higher restructuring expenses in the quarter. ConAgra spent $123 million during the third quarter due to capital expenditures for property, plant and equipment, compared to $117 million in the year-ago period.
 
For fiscal 2010, EPS grew to $1.74 from $1.50 in fiscal 2009, while revenues declined to $12.1 billion from $12.5 billion. The decline was primarily due to an 8.3% decrease in revenues from the Commercial Foods segment.
 
During fiscal year 2010, cost of goods sold as a percentage of revenues shrunk by 300 bps. This was driven by ConAgra’s cost reduction initiatives and initiated a culture of “zero” overhead growth across the organization. We anticipate this initiative will generate benefits in the upcoming years.
 
During the fourth quarter, ConAgra repurchased 4 million shares. At the end of fiscal 2010, $400 million out of the $500 million share repurchase authorization remained outstanding.
 
At the end of fiscal 2010, cash flow operating activities increased to $1,472.7 million from $124.0 million at the end of fiscal 2009, based on working capital adjustment.
 
Outlook
 
For 2011, ConAgra expects growth of 8% -10% over fiscal 2010 EPS of $1.74, and expects cash flow from operating activities of $1.2 billion.

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