ConAgra to take charge for peanut butter recall

Source | Reuters

ConAgra Foods Inc. (CAG.N: Quote, Profile, Research) will take a charge of $50 million to $60 million in the current quarter related to its peanut butter recall, the company said on Tuesday. It also forecast annual growth of 8 percent to 10 percent in earnings per share in fiscal 2008 through 2010.

The announcement of the charge, which works out to 6 cents to 8 cents per share, comes less than a week after ConAgra recalled its Peter Pan brand peanut better and the Great Value brand peanut butter it makes for Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) due to possible contamination with the salmonella bacteria.

Shares of ConAgra, which also makes Healthy Choice meals and Swiss Miss hot chocolate, fell less than 1 percent to $25.71 in early electronic trading.

ConAgra said its previous 2007 earnings guidance of $1.28 to $1.33 per share, excluding special items, would need to be adjusted downward for the impact of the recall. However, even including the recall charge, 2007 earnings will likely still be toward the low end of the $1.28 to $1.33 range because several units are performing better than planned, it said.

The comments from the Omaha, Nebraska-based food company came just hours before its chief executive, Gary Rodkin, was scheduled to discuss the company’s plans at a meeting with analysts and investors.

ConAgra said it would have more details about the financial impact of the recall when it reports fiscal third-quarter results on March 22.  

For fiscal 2008 through 2010, ConAgra forecast 2 percent to 3 percent annual sales growth and 8 percent to 10 percent earnings per share growth, excluding special items.

ConAgra said it expects profit margin to expand and return on invested capital to improve during the 2008-2010 period.

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