ConAgra says 3Q profit jumped 60 percent

OMAHA, Neb. -- ConAgra Foods Inc. said Thursday its third-quarter profit soared 60 percent as it raised prices and improved sales. The year-ago results were depressed by recall costs, however.

ConAgra also announced that it plans to sell its commodities trading group to the Ospraie Special Opportunities fund for $2.1 billion in cash and stock.

The financial results beat expectations, and its shares jumped $1.93, or 8.8 percent, to $23.82 in premarket trading.

In the third quarter ended Feb. 24, ConAgra reported net income of $309.1 million, or 63 cents per share. That's up from $192.6 million, or 38 cents per share, a year ago when ConAgra was recalling its Peter Pan peanut butter.

ConAgra reported revenue of $3.53 billion, up from $2.9 billion a year ago.

Analysts polled by Thomson Financial expect earnings of 39 cents per share on revenue of $3.17 billion.

ConAgra CEO Gary Rodkin said he decided to sell its trading group now, so the company could focus on its core consumer foods business and to take advantage of the current commodities market. He said most of the proceeds will be used to repurchase ConAgra stock.

"The benefit of capital redeployment, along with the ongoing growth initiatives in our core food businesses, are expected to improve the quality and sustainability of our earnings results," Rodkin said.

ConAgra's trading and merchandising group has boosted the company's profits and helped make up for disappointing sales of ConAgra's consumer products, which include Healthy Choice, Banquet, Orville Redenbacher, Chef Boyardee and Egg Beaters.

The company's trading and merchandising group buys and sells agricultural commodities, fertilizer and energy.

After the sale, the trading group will be renamed Gavilon LLC. Nearly all 950 employees of the trading group will become part of the new company.

Rodkin said the sale of the trading group won't affect ConAgra's long-term forecast of 8 to 10 percent growth in annual earnings per share.