Conagra Manufacturers feels first-quarter frostbite

CHICAGO — Conagra Manufacturers, Inc. is feeling the burn within the freezer aisle, the place some consumers opted out in favor of cheaper groceries within the latest quarter, stated Sean M. Connolly, president and chief government officer. He described a “short-term dynamic” during which “consumers have turned to extra hands-on meals preparation to get further bang for his or her buck,” reasonably than splurging on single-serve ready meals.

“Frozen meals has been one of many fastest-growing classes in consumption over the previous 40 years,” Mr. Connolly stated throughout an Oct. 5 earnings name. “This enlargement has been fueled by the long-term sustained client demand for comfort in addition to the addition of innovation and high quality elements. This 40-year pattern demonstrates the crucial position that frozen performs in offering handy, high-quality meals for each event, which shoppers have come to more and more depend on. That is central to why we imagine the present softness is short-term.”

Internet revenue attributable to Conagra Manufacturers, Inc. for the primary quarter ended Aug. 27 was $319.7 million, equal to 67¢ per share on the widespread inventory, which in contrast with a lack of $77.5 million within the year-ago interval. Adjusted web revenue elevated 15% to $316 million, pushed by a rise in gross revenue and a lower in promoting, basic and administrative bills.

Internet gross sales have been down barely from the prior 12 months at $2.9 billion.

Natural web gross sales decreased 0.3%, pushed by a 6.6% decline in quantity primarily as a consequence of industrywide slowdown in consumption and shifts in client habits, partially offset by a 6.3% acquire in worth/combine.

Working revenue for the Grocery & Snacks phase elevated 3.3% to $259 million on gross sales of $1.2 billion, up 1.2% from the earlier 12 months. Adjusted working revenue elevated 3.8% to $264 million, reflecting larger natural web gross sales and productiveness that greater than offset price of products offered inflation and better promoting and basic bills. Section efficiency benefited from a worth/combine enhance of 5.6%, partially offset by a quantity lower of 4.4%. Conagra Manufacturers stated it gained greenback share in snacking classes together with seeds, microwave popcorn and ready-to-eat pudding and gels, in addition to staples classes together with chili and canned meat.

Refrigerated & Frozen phase working revenue was $199 million, which in contrast with an working lack of $216 million the 12 months earlier than. Adjusted working revenue elevated 15% to $201 million, pushed by productiveness and decrease promoting and promotional spend that greater than offset decrease natural web gross sales, unfavorable working leverage, elevated enter prices and basic bills. Section gross sales declined 4.6% to $1.2 billion as a consequence of a quantity lower of 10.5%, partially offset by a worth/combine enhance of 5.9%. Conagra Manufacturers gained greenback share in frozen sides and frozen breakfast sausage in the course of the quarter.

Worldwide phase working revenue fell 12% to $24 million as a consequence of sure non-cash restructuring prices. Adjusted working revenue elevated 58% to $42 million, benefiting from larger natural web gross sales and productiveness that greater than offset the detrimental affect of prices of products offered inflation, unfavorable working leverage and elevated basic bills. Worldwide phase gross sales elevated 11% to $260 million, reflecting a 3.2% enhance from the favorable affect of international trade and an 8.2% enhance in natural web gross sales.

Foodservice phase working revenue was $44 million, which in comparison with $1 million within the comparable quarter. Adjusted working revenue soared 88% to $41 million, pushed by larger natural web gross sales and productiveness that greater than offset the impacts of enter price inflation and unfavorable working leverage. Section gross sales elevated 5.2% to $289 million, as worth/combine elevated 10% whereas quantity decreased 5.1%.

For the fiscal 12 months, administration is anticipating natural web gross sales development of roughly 1% over the 12 months earlier than. Adjusted earnings per share are anticipated to be between $2.70 and $2.75, an enchancment over fiscal 2023 earnings per share of $1.43.

Executives count on “an enhancing client setting” and a return to year-over-year quantity development because the 12 months progresses. Moreover, the corporate is planning “extra aggressive however sensible and selective merchandising” and “a very good innovation slate,” in addition to elevated promoting and promotional spend on a few of Conagra Manufacturers’ largest companies, Mr. Connolly stated.

“We have seen shifts like this earlier than and count on these near-term adjustments in habits to even be short-term,” he stated. “In reality, latest tendencies counsel that is already underway.”

Shares of Conagra Manufacturers buying and selling on the New York Inventory Change have been barely down noon on Oct. 5. at $26.32 from the earlier shut of $26.53.