NEBRASKA, USA

Poor shopper response to promotions helped cause ConAgra Foods Inc.’s fiscal second-quarter net income to fall 16 per cent.

ConAgra initially benefited from the economic downturn as people ate at home more. But increased competition led many food makers and retailers to rely heavily on discounts and other promotions to drive sales.

That strategy, however, can punish profits, particularly if consumers don’t respond as expected.

ConAgra, whose brands include Banquet and Chef Boyardee, reported Tuesday that it earned US$200.9 million, or 45 cents per share, for the period ended Nov. 28. That’s down from US$239.7 million, or 54 cents per share, a year ago.

The Omaha, Nebraska-based company warned investors earlier this month that its results would be weaker than initially expected.

Still, the performance met the estimates of analysts polled by Thomson Reuters.

CEO Gary Rodkin said in a statement that the company’s consumer foods’ segment was weighed down by difficult market conditions and higher-than-expected inflation for ingredients. To help combat inflation, ConAgra is raising prices on some of its products. Some increases have already occurred, with more under way.

The commercial foods division was hampered by the selling and processing of last year’s low-quality potato crop, he added.

Revenue rose 2 per cent to US$3.16 billion, topping the US$3.13 billion Wall Street expected.

Revenue for the consumer foods unit edged up 1 per cent to US$2.1 billion, while the commercial foods segment’s revenue climbed about 3 per cent to US$1.06 billion.

The consumer foods division made up 67 per cent of second-quarter revenue, while the commercial foods unit comprised 33 per cent.

Looking ahead to fiscal 2011, ConAgra expects adjusted earnings to rise at a low-single digit per centage rate from its 2010 earnings of US$1.74 per share.

Analysts predict earnings of US$1.76 per share for 2011.

-AP