Conagra Brands Inc beat quarterly revenue expectations on Thursday, as the Slim Jim beef jerky maker raised prices for its frozen meals and snacks.
Conagra, like its peers Campbell Soup Co, Kraft Heinz Co and Unilever PLC, has been bumping up product prices in recent months to offset inflationary pressures, aiding the sales momentum over the past year.
It reported net sales of $2.65 billion (€2.29 billion) in the first quarter of its financial year, compared with $2.68 billion (€2.32 billion) a year earlier, beating analysts' average estimate of $2.54 billion (€2.2 billion), according to Refinitiv IBES.
Net income attributable to Conagra fell to $235.4 million, or 49 cents per share, in the quarter ended 29 August, from $329 million, or 67 cents per share, a year earlier.
Adjusted EBITDA, which includes equity method investment earnings and pension and post-retirement non-service income, decreased 22.6% to $501 million in the quarter, primarily driven by the decrease in adjusted gross profit, the company added.
In July, the Conagra Brands warned that higher raw material and ingredient costs would take a bigger bite out of its profit this year than previously estimated, in another sign that supply chain hiccups are battering the sector.
'On-Track With Profit Plan'
Commenting on the company's performance, Sean Connolly, president and chief executive officer of Conagra Brands, said, "Overall, I am pleased with the results we delivered in the first quarter, which have kept us on-track with our profit plan for the year. Our team showed great agility in navigating the dynamic external environment.
"We continue to experience ongoing inflationary pressure, but expect the sustained elevated consumer demand and the comprehensive actions we have executed and expect to execute in the future, will enable us to successfully deliver our adjusted EPS guidance for the year."
Net sales in the company's grocery and snacks segment decreased 4.9%, to $1.1 billion, reflecting a 1.6% decline from the impact of sold businesses and a 3.3% fall in organic net sales.
The division's adjusted operating profit decreased 25.9%, to $220 million, driven by cost of goods inflation, organic net sales decline, unfavourable fixed cost leverage related to lower volume, increased A&P investment, and the lost profit from sold businesses.
In the refrigerated and frozen segment, net sales saw a 2.5% year-on-year decline, to $1.1 billion, while adjusted operating profit decreased 33.8%, to $163 million.
The international segment reported net sales growth of 8.1%, to $237 million, driven by favourable impact of foreign exchange and growth in organic net sales.
Net sales in the foodservice segment increased 20.9%, to $240 million. Organic net sales saw a 21.7%% growth during the quarter as restaurant traffic continued to recover from the impact of the COVID-19 pandemic.