ConAgra's profit beat sends shares to record high

ConAgra Brands Inc , the maker of Chef Boyardee pasta and Orville Redenbacher's popcorn, reported a better-than-expected quarterly profit as the company benefited from less discounting and lower costs.

The company's shares rose as much as 3.68 percent to touch a record high of $39.40 in morning trading on Thursday.

The packaged foods maker has been trying to boost profit by investing in higher-margin products such as Reddi-wip whipped cream and Hunt's ketchup and clamping down on unprofitable volume sales to retailers.

ConAgra said gross margin rose 270 basis points to 31 percent in the second quarter ended Nov. 27.

Part of that came from higher prices on upgraded products such as Banquet's frozen meals, which were previously sold at $1. ConAgra has tweaked the brand's recipes, adding more chicken to pot pies and cream to mashed potatoes.

Margins were also helped by more effective promotions for the company's premium meals, Tom McGough, president of ConAgra's consumer foods business, said on a conference call.

The Chicago-based company said it would push ahead with efforts to shore up margins and to reshape its portfolio by exiting low-profit brands and adding products through acquisitions.

The quarterly results were the first since ConAgra spun off its Lamb Weston frozen potato business in November to become a branded-foods only company.

The company sold its loss-making private label business to TreeHouse Foods Inc in February.

Net income attributable to ConAgra fell to $122.1 million, or 28 cents per share, in the quarter, from $154.9 million, or 35 cents per share, a year earlier.

Selling and general expenses fell 13.5 percent to $417.9 million.

Excluding items, the company earned 49 cents per share from continuing operations, beating the average analyst estimate of 45 cents, according to Thomson Reuters I/B/E/S.

Net sales fell 11.5 percent to $2.09 billion, missing the average analyst estimate of $2.11 billion.

The company said it expects sales trends to improve in the second half of the year.

Up to Wednesday's close of $38, ConAgra's stock had risen about 16 percent since the start of the year.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Martina D'Couto)