Vending

Consumption trends, investments hammer Conagra Brands Q2 2024 results

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January 4, 2024

Conagra Brands Inc. suffered a sales and earnings decline for Q2 2024 against the prior year period, driven by a price/mix decrease, lower consumption trends and increased investments, according to an earnings report. Highlights include:

• Net sales decreased 3.2% from $3.31 billion in Q2 2023 to $3.21 billion in the quarter ending Nov. 26, 2023.
• Net income fell 25.1% from $382.2 million to $286.2 million in the comparative quarters.
• Organic net sales decreased 3.4% driven by a 0.5% negative impact from price/mix, partially attributable to an increase in strategic investments, and a 2.9% decrease in volume, primarily due to continued lower consumption trends.
• EPS on a basic basis fell 25% from 80 cents to 60 cents.
• EPS on a diluted basis fell 24.1% from 79 cents to 60 cents.
• Adjusted EPS rose 12.3% to 71 cents.
• Reported and organic net sales for the grocery and snacks segment decreased 4.1% to $1.3 billion in the quarter driven by a price/mix decrease of 0.4%, partially attributable to an increase in strategic investments, coupled with a volume decrease of 3.7%, primarily due to continued lower consumption trends.
• Reported and organic net sales for the refrigerated and frozen segment decreased 5.8% to $1.3 billion in the quarter as price mix decreased 2.5%, partially attributable to an increase in strategic investments, and volume decreased 3.3%, primarily due to continued lower consumption trends.
• Net sales for the international segment increased 8.1% to $280 million in the quarter reflecting a 2.5% increase from the favorable impact of foreign exchange and a 5.6% increase in organic net sales.
• Reported and organic net sales for the foodservice segment increased 4.3% to $295 million in the quarter.

Shares traded at $28.61 today against a 52-week range of $25.16 to $41.30.

The $3.21 billion in quarterly revenue missed analyst expectations by $20 million while the non-GAAP EPS of 71 cents beat expectations by 3 cents, according to Seeking Alpha.

"Despite an ongoing challenging macro environment, we saw several positive signs in Q2," Sean Connolly, president and CEO, said in the press release. "In particular, volume trends in our domestic retail business improved substantially, as inflation-driven volume declines were cut in half compared to Q1. Most importantly, our targeted investments in our frozen business generated strong lifts and market share gains. These developments reinforced our confidence in investing to build momentum in the second half and set up a strong FY25."

The company expects organic net sales to decrease between 1% and 2% in fiscal 2024 compared to fiscal 2023 while adjusted EPS is expected to be between $2.60 and $2.65.