Conagra Brands Inc forecast annual earnings below Wall Street expectations on Thursday, as price hikes dent demand for its frozen foods and snacks while mounting costs crimp margins.
Lingering supply chain issues and soaring freight and ingredient costs have eaten into Conagra's profit margins, even as it raised product prices several times over the past year.
As decades-high inflation pinches spending at American households, top retailers have also warned that more consumers are turning to cheaper private-label products, hurting demand at Conagra.
Conagra, known for brands such as Birds Eye and Chef Boyardee, said its volumes fell 6.4% in the fourth quarter, as consumers showed signs of pushing back against price increases.
The more-than-a-century-old company said it expects volumes to take a bigger hit in fiscal 2023 as it undertakes price hikes to mitigate higher costs, which the company anticipates will remain elevated through the year, sending shares down about 3.3% in premarket trade.
Conagra said it expects full-year adjusted profit per share to grow by 1% to 5% compared with analyst expectations of an 8.26% growth, as the packaged food maker anticipates gross inflation in the low-teen percentage range for the year.
Net sales rose 6.2% to $2.91 billion in the fourth quarter ended 29 May, missing analysts' average estimate of $2.93 billion, according to Refinitiv IBES data.
Net income attributable to Conagra declined to $158.9 million, or 33 cents per share, from $309.5 million, or 64 cents per share, a year earlier.
Excluding one-time items, the Chicago-based company earned 65 cents per share, above estimates of 63 cents per share.
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