Conagra Brands Inc (NYSE:CAG) stock fell 1.90% (As on July 14, 11:49:25 AM UTC-4, Source: Google Finance) after the company forecast annual sales and profit below Wall Street estimates, in a sign that the packaged food giant was starting to face some pushback to higher prices from inflation-weary customers. The adjusted gross profit jumped 11% to $803 million. The adjusted gross margin expanded 216 basis points (bps) to 27%. Adjusted EBITDA (including equity method investment earnings and the pension and post-retirement non-service income) inched up 0.6% to $594 million, mainly led by the higher adjusted gross profit, negated by increased SG&A costs and reduced pension income.
CAG in the fourth quarter of FY 23 has reported the adjusted earnings per share of 62 cents, beating the analysts’ estimates for the adjusted earnings per share of 60 cents. The company had reported the adjusted revenue growth of 2.2 percent to $2.97 billion in the fourth quarter of FY 23, missing the analysts’ estimates for revenue of $2.99 billion, according to Refinitiv IBES estimates. This is hurt by a 1.1% fall in the company’s refrigerated & frozen segment after a cybersecurity incident at a key cold storage partner Americold Realty Trust caused disruptions to parts of its operations.
Moreover, Grocery & Snacks Quarterly net sales in the segment came in at $1,200 million, up 3.6% year over year. During the quarter, CAG saw share gains in snacking categories like meat snacks and seeds and few staples’ categories like canned pasta, Asian sauces and marinades. Refrigerated & Frozen Net sales inched down 1.1% to $1,219.4 million. The company saw an improved share in multi serve meals, frozen sides and frozen breakfast sausage. International net sales advanced 8.6% to $250.6 million, reflecting improved organic net sales. Organic sales rose 9.5%, with the price/mix up 13.8% and volumes down 4.3%. Foodservice sales advanced 5.5% to $303.3 million.
Additionally, Chicago-based Conagra raised its quarterly dividend to 35 cents a share from 33 cents.
The company forecast fiscal 2024 adjusted EPS between $2.70 and $2.75, compared with analysts’ average estimate of $2.85 per share. Full-year organic net sales growth is expected to be 1% higher than 2023, while analysts on average were expecting an increase of 2.77%. For fiscal 2024, capital expenditures are likely to be about $500 million. The adjusted operating margin is expected in the band of 16-16.5% for fiscal 2024.