ConAgra to concentrate on packaged food segment

ConAgra Foods' recent move to separate financial results of its branded foods from agricultural businesses might be more than a bookkeeping shuffle, and could prepare the ground for an eventual spinoff or sale of the company's slower-growing units, analysts said. "This could be the first step," said Deutsche Banc Alex. Brown analyst Eric Katzman. "They've been putting resources behind the higher-margin packaged foods areas, and by their own admission have disclosed that parts of their agricultural products, and even meat-processing, have underperformed." ConAgra, which released fiscal second-quarter earnings last Thursday, has shifted from three reporting divisions to four: packaged foods, food ingredients, meat processing and agricultural products. It moved nearly all of its branded foods, well-known products such as Healthy Choice meals, Slim Jim snacks, Reddi-wip dessert topping, and Parkay margarine, under one unified "packaged foods" division. It now lists its meat processing business, including fresh beef, pork and poultry, all commodity-dependent and tied to agricultural trends, separately. Omaha, Nebraska-based ConAgra also created a separate division for its spices and other food ingredients, pulling them out from under the fold of its agricultural products, which primarily consists of fertilizers and crop chemicals. At the same time, the company, which has been criticized by Wall Street for weakness in some of its retail lines, is ramping up marketing spending behind branded products. The company sacrificed profits in the second quarter for a planned increase in advertising for its retail products. "They're clearly focused on building up and expanding the branded and packaged food segment," Credit Suisse First Boston analyst David Nelson said. "The era of farm to fork is over."