UPDATE: ConAgra 4Q Sales Down 5%; Foodservice Business Pressured

ConAgra Foods Inc.'s (CAG) fiscal fourth-quarter sales declined 5% as the company's foodservice business stayed under pressure and as sales of brands like Egg Beaters and Act II popcorn slipped.

The company reported a 48% drop in profit as it absorbed charges for manufacturing changes and other items, and results came in below Wall Street's expectations. The company's year-ago quarter also had an extra week of operations. The stock was recently down 1.4% to $24.34 premarket.

The maker of Chef Boyardee pasta, Hunt's ketchup and Peter Pan peanut butter forecast per-share earnings growth for the new year of 8% to 10%, mostly concentrated in the second half of the fiscal year. Analysts surveyed by Thomson Reuters expected 10% growth to $1.91 a share.

Volumes at the company's key consumer foods segment declined, although the company said that they rose when adjusted for an extra week in the year ago period. Companies like ConAgra benefited in the downturn from cash strapped consumers eating more meals at home, but these companies' foodservice businesses - which supply restaurants - have been pinched.

For the quarter ended May 30, ConAgra reported a profit of $90.6 million, or 20 cents a share, down from $174.7 million, or 39 cents, a year earlier. Excluding hedging and other items, earnings from continuing operations fell to 39 cents from 41 cents as revenue dropped 5% to $3.06 billion.

Analysts had most recently forecast earnings of 40 cents on $3.18 billion in revenue.

Sales at the consumer-foods unit, ConAgra's biggest, fell 4.3%, but the company said they rose 3% when adjusted for the extra week a year earlier. Profit slid 15% and volume dropped 4%. Meanwhile, revenue at the commercial-foods segment declined 6.3% while profit slumped 26%. The commercial foods segment caters to the foodservice industry and has been under pressure as restaurants have done poorly.

-By Nathan Becker and Anjali Cordeiro, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com

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