ConAgra, General Mills Look Ahead to 2012... Quite Differently (CAG, GIS, KFT, HNZ, K)

Food producers have been battling rising commodity costs, higher fuel costs, and higher packaging costs by raising their prices. That appears to be working decently for ConAgra Foods Inc. (NYSE: CAG) and not so well for General Mills Inc. (NYSE: GIS), both of which reported second fiscal quarter earnings this morning. Kraft Foods Inc. (NYSE: KFT, H.J. Heinz Co. (NYSE: HNZ), and Kellogg Co. (NYSE: K) have all fought the same battle with mixed success.

ConAgra reported reported adjusted EPS of $0.47, compared with a consensus estimate of $0.43. Revenue came in at $3.4 billion, compared with an estimate of $3.34 billion. In the same period a year ago, ConAgra posted EPS of $0.46 on $3.15 billion in revenue.

General Mills reported adjusted EPS of $0.76, below estimates of $0.79. Revenue beat expectations of $4.6 billion, coming in at $4.62 billion. A year ago, General Mills posted adjusted EPS of $0.92 on revenue of $4.1 billion.

ConAgra expects EPS growth in the low- to mid-single digit range for the 2012 fiscal year. The current consensus EPS estimate is $1.80 for the full year ending in May, compared with EPS of $1.75 last year. ConAgra, which failed in a hostile takeover attempt on Ralcorp Holdings Inc. (NYSE: RAH), has been making small acquisitions to boost its revenues.

General Mills forecasts full-year EPS of $2.59-$2.61, while the consensus estimate is $2.61, up from $2.48 last year. The company is looking to its recently acquired controlling stake in yogurt maker Yoplait to help boost earnings.

In the early afternoon today, ConAgra shares are up more than 3.5% at $26.10, after posting a new 52-week high this earlier of $26.38. Trading volume is heavy, with 4.8 million already having trading hands today, compared with a daily average of 4 million.

General Mills shares are down about -1.5% at $39.00 in a 52-week range of $34.54-$40.72. Volume is also heavy in the shares, with more than 5 million traded so far today compared with a daily average of about 4.6 million.

Paul Ausick