Conagra Lifts Profit Forecast As Price Hikes Offset Demand Pressures

By Reuters
Share this article
Conagra Lifts Profit Forecast As Price Hikes Offset Demand Pressures

Conagra Brands Inc raised its full-year profit forecast, as the Slim Jim beef jerky maker bets on price increases to shield its margins at a time when demand for its frozen foods and snacks showed signs of weakening.

Packaged food companies have been raising product prices to limit margin pressures from elevated supply-chain related expenses as well as higher costs of packaging, transportation and labor.

These price increases have boosted profits at Conagra, which is now also benefiting from easing inflation in commodity prices including those of meat and other proteins. The company's gross margin rose 325 basis points to 27.2% in the reported quarter.

However, higher grocery and food prices have forced some consumers to trade down from branded packaged food products to cheaper, private-label alternatives, denting sales volumes at Conagra.

Read More: Kraft Heinz Forecasts 2023 Profit Below Estimates On Higher Costs


Quarterly Highlights

The Act II microwave popcorn owner saw a 9% fall in total volumes in the three months ended 26 February, its eighth straight quarterly decline.

That prompted the company to trim the top end of its annual organic net sales forecast to a 7% to 7.5% rise, compared with a 7% to 8% growth estimated earlier.

Shares of the company, known for brands such as Birds Eye and Duncan Hines, fell marginally before the bell.

Credit Suisse analysts have also warned that Conagra sales could decelerate faster compared to its peers in full-year 2024, owing to the company's exposure to price-sensitive, lower-income consumers.


Conagra said it expected fiscal 2023 adjusted per-share profit between $2.70 and $2.75, compared with its prior forecast of $2.60 to $2.70.

It reported third-quarter adjusted earnings of 76 cents per share on net sales of $3.09 billion (€2.82 billion), above estimates of 64 cents per share on revenue of $3.08 billion (€2.81 billion), according to Refinitiv data.

News by Reuters, edited by ESM – your source for the latest A-Brands news. Click subscribe to sign up to ESM: European Supermarket Magazine.

Get the week's top grocery retail news

The most important stories from European grocery retail direct to your inbox every Thursday

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our terms & conditions and privacy policy. You can unsubscribe at any time.