ConAgra expects up to $60 million charge from recall
Published:21-February-2007
By
US-based ConAgra Foods, which was forced to recall its Great Value and Peter Pan peanut butter products, has estimated the recall will cost the food processor up to $60 million.
ConAgra said it expects to suffer a charge of between $50 million and $60 million in its third quarter, after the peanut butter was linked to Salmonella poisoning which caused 300 people to fall ill. The company said the charges include the cost of recalling and destroying the product, as well as the lost sales of peanut butter.
The company said the charge, which equates to $0.06 to $0.08 per share, will impact on its quarterly earnings. ConAgra now expects earning towards the lower end of its forecast at approximately $1.28 per share.
As a result of the recall, ConAgra closed its plant in Sylvester, Georgia, where its peanut butter is manufactured. The plant will remain closed until the source of the Salmonella is found. This effectively removes ConAgra's presence from the peanut butter market, which may further impact on the company's financials.
