ConAgra Foods Inc. Thursday cut its dividend and said it planned to divest its seafood, domestic and imported cheese businesses.
The company also said it expected to earn $1.10 to $1.15 a share excluding items for fiscal 2007. Analysts were expecting $1.36, according to Reuters Estimates.
ConAgra said it expected operating earnings to be depressed until fiscal 2009, when profit should return to current levels. During the rest of 2006, the company expects to record charges related to the divestitures and restructuring.
The company also cut its quarterly dividend to 18 cents per share, 9.25 cents per share lower than its most recent quarterly dividend.
“It is essential that we increase our investments behind our highest potential brands, simplify our portfolio of businesses and build a high quality earnings trajectory for ConAgra Foods,” Gary Rodkin, company president and chief executive, said in a statement.
The company spends about 11.5 percent of its sales on general, administrative and other expenses, Pablo Zuanic, analyst at J.P. Morgan Securities, said in a recent research note. That compares with an average of about 23 percent of the U.S. packaged food industry, he said.
Meanwhile, until the dividend cut, the company has a dividend yield of 5.20 percent, by far the highest in the Dow Jones U.S. Food Producers index. Most of the companies in that index have a yield of less than 3 percent.
