Conagra Brands Inc (NYSE:CAG) stock rose 0.21% (As on July 12, 11:17:46 AM UTC-4, Source: Google Finance) after the company forecast annual revenue and profit below analysts’ estimates, as cash-strapped consumers turned to cheaper pantry staples for their at-home meals. The 1.8% volume decline seen in the fourth quarter was in line with the prior quarter, as Conagra reduced prices of some of its frozen products to lure back consumers. However, volumes in the snacks category remained weak, falling 3.6% in the quarter, as consumers shifted towards private label brands sold at Walmart and Kroger.
CAG in the fourth quarter of FY 24 has reported the adjusted earnings per share of 61 cents, beating the analysts’ estimates for the adjusted earnings per share of 56 cents. The company had reported the adjusted revenue decline of 2.3 percent to $2.91 billion in the fourth quarter of FY 24, missing the analysts’ estimates for revenue of $2.93 billion. Organic net sales decreased 2.4% year over year due to a 1.8% drop in volumes, which stemmed from the continuation of the slowdown in consumption. Also, the price/mix had a 0.6% adverse impact on organic sales as a result of elevated strategic investments.
Moreover, the adjusted gross profit remained flat year over year at $803 million. The adjusted gross margin improved 62 basis points (bps) to 27.6%. This was due to higher productivity, which more than offset the adverse impacts of lower organic net sales, cost of goods sold inflation and adverse operating leverage. Adjusted EBITDA came in at $577 million, down from the $594.2 million recorded in the year-ago period. The company exited the quarter with cash and cash equivalents of $77.7 million, senior long-term debt (excluding current installments) of $7,492.6 million, and total stockholders’ equity of $8,511.3 million. In fiscal 2024, Conagra generated $2 billion as net cash flows from operating activities, with capital expenditures amounting to $388 million. The company generated a free cash flow of $1.6 billion in the fiscal year.
Additionally, the company has announced the continuation of its dividend rate of $1.40 per share. The company will pay a quarterly dividend of 35 cents per share on Aug 29, 2024, to shareholders of record as of Aug 1.
Conagra expects fiscal-year 2025 organic sales to be flat to down 1.5%, compared with analysts’ estimates of 1.54% rise, as per LSEG data. Adjusted profit for the year will range from $2.60 to $2.65 per share, compared to analysts’ estimates of $2.69 per share.