Conagra Brands Inc's on Thursday reported quarterly earnings and sales that fell short of analysts' estimates, citing weak demand for its Hunt's and Chef Boyardee brands and manufacturing challenges.
The Chicago-based company, which has faced soaring commodities and freight costs for more than a year, also blamed the divestiture of its Wesson oil business and the impact of foreign exchange. Sales in the fourth quarter declined across its business units.
'Intensified Promotional Competition'
"Much of our progress was overshadowed by transitory events, including intensified promotional competition in certain categories, several isolated manufacturing-related challenges, and weak performance in our Ardent Mills joint venture," chief executive Sean Connolly said in a statement, noting that quarterly results were below expectations.
With the sale of its frozen Italian food brand Gelit, Conagra said, the company now expects adjusted profit for the current year in the range of $2.08 per share to $2.18, largely below analysts estimates of $2.16.
Net sales rose 32.9% to $2.61 billion (€2.29 billion), mostly because of the acquisition of Pinnacle Foods, but missed expectations of $2.66 billion (€2.34 billion), according to IBES data from Refinitiv.
Excluding items, the company earned 36 cents per share, short of the average analyst estimate of 41 cents.
Sales in Conagra's refrigerated and frozen business, previously a bright spot for the company, declined 0.6% to $687 million due in part to lower demand and a P.F. Chang's recall. The unit makes Marie Callender's frozen meals and Reddi-wip whipped cream.
"Conagra's growth momentum in the frozen category appears to have started to taper off," Bernstein analyst Alexia Howard said on Monday in an earnings preview note. "This seems to have coincided with Kraft Heinz's heavy promotion in frozen products."
To appeal to increasingly health-conscious consumers, Conagra beefed up its portfolio of frozen food with its acquisition of Pinnacle Foods in 2018, adding such products as meat-alternative brand Gardein and Birds Eye.
Net sales in the company's grocery and snacks business - its biggest after Pinnacle and home to brands such as Slim Jim and Peter Pan - fell 7.1%. The company blamed unexpected merchandising changes and production challenges for the decline.
Net income attributable to the company rose to $126.5 million (€111.22 million), or 26 cents per share, in the fourth quarter ended 26 May, from $69.6 million (€61.19 million), or 18 cents per share, a year earlier.
In March of this year, Conagra Brands Inc reported a better-than-expected profit in the third quarter of its financial year,