Conagra stays on track with profit plan | 2021-10-08

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CHICAGO – Despite a complex operating situation, Conagra Brands, Inc. delivered a strong first quarter revenue performance driven by strong demand, strong branding investments and justified pricing actions by inflation.

Conagra Brands’ net income for the first quarter ended Aug. 29 was $ 235.4 million, or 49 per share on common shares, down 29% from $ 329 million, or 67 per share, as of Same quarter a year ago, but up 35% from $ 173.8 million, or 36 per share in the first quarter of fiscal 2020.

Net sales declined 1% in the first quarter, falling to $ 2.65 billion from $ 2.68 billion in the first quarter of fiscal 2021, but up 11% from 2.39 billion dollars in the first quarter of fiscal 2020. The decline in sales primarily reflects the Hong Kong divestitures. The Anderson Company, The Peter Pan Peanut Butter Company, and The Egg Beaters Company.

“First of all, as everyone knows, the external environment is incredibly dynamic right now, and we see that many of these challenges persist,” said Sean M. Connolly, President and CEO, during a conference call with analysts on Oct. 7. “But despite the complex operating situation, the continued dedication, resilience and agility of our team allowed us to deliver strong first quarter results through strong sales. We continue to benefit from our proven approach to brand building and the scale of the investments we make to increase consumer demand. These efforts contribute to the health of the brand, as evidenced by the continued strength of our sell, share and repeat rates across the portfolio.

“As a result, we believe our brands are well positioned to continue to manage current inflationary challenges and support ongoing pricing actions justified by inflation.”

Grocery and Snacks adjusted operating income totaled $ 220 million in the first quarter of fiscal 2022, down 26% from $ 297 million in the same period a year ago. but up 5.8% from $ 207.8 million in the first quarter of fiscal 2020. Net sales totaled $ 1.08 billion, down 5% from $ 1.13 billion. dollars over the same period of FY2021, but up 10% from the same period of FY2020.

Conagra said it gained shares in the quarter in commodity categories such as canned tomatoes and chili, and snack categories including popcorn and pudding.

Commenting on the growth in snacks on the conference call, Mr Connolly said it was a continuing trend that “has long been the opportunity for the fastest growing in food and shows no signs. slowdown “.

“We have a very strong $ 2 billion ready-to-eat snack business that spans several sub-categories where we have either the fastest growing brand, the biggest brand, or both,” he said. declared. “The COVID-19 pandemic has only served to accelerate these existing trends and create additional long-term growth engines. One of the main drivers of the increase in eating at home is the changing dynamics of the workplace which significantly alter eating behavior on weekdays. This includes both contract labor and the increase in remote work. “

In the Company’s Refrigerated & Frozen business, adjusted operating income for the first quarter of fiscal 2022 was $ 162.6 million, down 34% from $ 245.8 million in the first quarter. quarter of fiscal 2021 and down 5.5% from $ 172 million in the first quarter of fiscal 2020. Net sales totaled $ 1.11 billion, down 2.6% from compared to $ 1.13 billion in the first quarter of fiscal 2021, but up 15% from $ 959.1 million in the first quarter of fiscal 2020.

Conagra said it gained shares in the quarter in categories such as single-serve frozen meals, smoothies and frozen handhelds.

“We know that annual frozen category spending per buyer increases in households with young children, and it increases further as children grow older,” Connolly said. “It is important to note that almost half of millennials have not yet started having children, and we expect their consumption of Conagra products to increase as their families grow.”

David S. Marberger, executive vice president and chief financial officer, told the conference call that Conagra remains confident in its initial guidance for adjusted earnings per share of around $ 2.50 per share, but expects that the way forward to achieve these forecasts is changing.

Mr Marberger said Conagra now expects organic net sales growth of around 1%, which compares to previous expectations of roughly stable growth. Meanwhile, the company expects the adjusted operating margin to continue to be around 16%, but is seeing a slight squeeze from the original forecast, he said.

“We expect the increase in dollar profit resulting from the increase in net sales as well as additional cost savings to offset the net increase in dollar inflation,” he said.

“Our final performance will depend heavily on a number of factors, including: first, how consumers buy food as dining establishments continue to reopen and people return to work in the office and school in person; second, the level of inflation that we finally experienced; third, the elasticity of the impact of demand when consumers react to higher prices; and finally, the ability of our end-to-end supply chain to continue to operate effectively as the pandemic continues to evolve. “

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