Recently, ConAgra Foods, Inc. (CAG) discussed its key strategic priorities and also announced its current financial outlook.
 
ConAgra expects fiscal 2010 EPS to be $1.73, compared to an EPS of $1.42 in fiscal 2009. Annual sales growth is expected in the range of 3% to 4% over the long term and annual EPS growth is expected in the range of 8% to 10%. Return on Invested Capital is expected between 13% and 14% over the long term.
 
ConAgra also approved a $500 million share repurchase authorization with no expiration date. This reflects the company’s strong cash position and positive cash flow outlook. ConAgra plans to repurchase its shares periodically, depending on market conditions and other factors, and may do so in the open market or through privately negotiated transactions. The company expects this to be a multi-year program.
 
The company has significant potential, based on the improvements in its supply chain, sales execution, marketing, and innovation capabilities.
 
ConAgra is a leading North American food processing company serving grocery retailers, restaurants and other foodservice establishments.
 
The company has grown primarily through acquisitions and divestitures, which would continue in the future. ConAgra has divested several businesses in fiscal 2008 and 2009, including trading and merchandising operations, Pemmican beef jerky business and Knott’s Berry Farm jelly and jam business.
 
ConAgra also made strategic investments in order to enhance the portfolio. In fiscal 2009, it started a potato processing venture, Lamb Weston BSW, with an initial investment of $46 million. This plant will significantly expand the company’s presence in the sweet potato fries market and is expected to enable additional significant sales and profit growth opportunities for the Lamb Weston specialty potato operations over time.
 
The company’s cost reduction initiatives will bear fruit going forward. ConAgra continues to focus on controlling general and administrative costs by driving a culture of “zero overhead growth” across the organization. We anticipate this initiative will generate benefits in fiscal 2010 and beyond.
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