|  |
He’s three years into his position as chief executive officer of ConAgra Foods, and it looks like Gary Rodkin finally has the company right where he wants it. Since arriving at ConAgra in 2005, he has reorganized upper management and streamlined the conglomerate by selling off brands and divisions — ranging from the Butterball turkey and Knott’s Berry Farm brands to his sale last month of the entire ConAgra Trade Group, a $2.8 billion commodities trading operation.
“We’ve done a lot of very heavy lifting as a company, making things simpler and more effective, strengthening the innovation pipeline, changing the organization structure, refocusing the portfolio, significantly improving the marketing, supply chain and customer service functions, and, very importantly, [adopting] a mind-set of more aggressively recovering input cost increases,” Rodkin said last month during ConAgra’s fourth-quarter earnings call with investors and analysts.
Like many major packaged food suppliers, ConAgra’s biggest challenge in the near term is to find a way to keep pace with significant input cost inflation by raising the prices on its products — including brands such as Chef Boyardee, Hebrew National, Hunt’s, Orville Redenbacher, Healthy Choice and Marie Callender’s — without sacrificing too much volume.
Rodkin, former CEO and president of PepsiCo’s North America division, has said he believes that with good brand positioning and the right marketing message, the company can walk this tightrope, and deliver better earnings as a smaller company focused on a tighter roster of brands.
The sale of the company’s commodities trading operation is expected to produce more consistent operating cash flows eventually, but so far, the response from Wall Street has been mixed.
“Selling a profitable division just to have more predictability is not in the best interest of shareholders longterm,” Motley Fool senior analyst Bill Mann told Forbes.
By contrast, Citigroup analyst David Driscoll praised the company’s streamlined approach in a recent research note, describing ConAgra as “a company on the rise,” despite a weaker-than-expected forecast for fiscal 2009.
— MATTHEW ENIS
