ConAgra Foods, Inc. CAG
Q2 2011 Earnings Call Transcript

Operator: David Palmer, UBS.

David Palmer - UBS: Two related questions. You mentioned that net pricing actions were resolved in some sort of a modest but acceptable volume hit. What net pricing and volume reaction should we be thinking about if you can give us some rough brackets? Then also I guess somewhat related to that, are you seeing signs in the marketplace today from some of these actions that are giving you comfort that this is only a modest volume hit? Then focusing on the frozen entr�es area it seems that is one area where promotions continue and it looks like promotion effectiveness is almost alarmingly too high. In other words, it's encouraging folks to keep the promotion pedaled to the metal, do you see it that way in that particular category?

Gary Rodkin - CEO: David, that's a lot of questions and I will deal with the first part of it and then I will turn it over to Andr� to finish up. I would tell you that the key word here is modest. So we are not looking at a huge downward movement in our volume. We're being very smart with our pricing architecture and our strategies, but we are believing it is critically important to take net pricing actions, both in our list price in some products and in our merchandising strategies in others given the intense commodity inflation. So, we are willing to make that trade-off that we are being very judicious. We won't see major spikes, up or down, either on pricing or in volume, but when it comes to making that trade-off, we are willing to do so. Andr�, want to fill in some more?

Andr� Hawaux - President, Consumer Foods: David, the second part of your question was, as we've announced some of these increases, what have we seen to either give us comfort to the modest number that Gary mentioned? I think, so far, based on what we're seeing in both consumption up-take in syndicated channels, we would say that the right word is modest. We haven't seen significant declines in our volume. I would say though that not all that pricing is through. As you all know, that there's still timing that needs to happen for some of the merchandising to flow through. The third part of your question was around frozen. I will tell you a couple of things on frozen. One is, that category historically, and I believe in the future, will continue to be a very promoted category. It is one where, on average, one of the major companies has something going on every week. I don't believe that's going to change, that's the nature of that category. What I do think we are going to do, based on some of the inflation that we're seeing is, we are going to continue to try to maintain the same level of frequency, but the depth is something that we're going to have to come off of. So we're not going to be able to maintain the kind of depth of promotion or depth of pricing that we've seen in the past because of the inflation. So, the goal for us is to maintain the quality of merchandising that we do get certainly at higher price points.

Operator: Bryan Spillane, Bank of America Merrill Lynch.

Bryan Spillane - Bank of America Merrill Lynch: Two questions; one, just in terms of SG&A in the back half of the year. Will advertising and marketing expenses be up or down in the back half of the year? What I am try to get at is, are you going to try to support price increases with more advertising, just how should we think about that?