Conagra Brands has confirmed its guidance for the year – forecasting a 4-5% sales drop – after revenue and operating profit declined during its second quarter.
The company said net sales in the three-months to 27 November dropped 11.5% to US$2.09bn. Conagra attributed the decrease to volume losses as it works to strengthen its price-mix and move to higher margin products. Divestitures and foreign exchange lowered sales by 5.5%, Conagra added.
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Sean Connolly, president and chief executive officer of Conagra, explained: “We are successfully reshaping our portfolio, capabilities, and culture. Our increased focus and discipline on driving value over volume are enabling us to expand our margins as we build a higher-quality revenue base, improve efficiency, and deliver stronger, more consistent performance.”
Segment operating profit decreased 5.5% in the period to $342.9m on the back of a 270 basis point improvement in gross margins.
The company, which span off from frozen potato business Lamb Weston, saw interest costs and general corporate expenses fall by around one-third year-on-year. However, this was more than offset by an 80% jump in income taxes. Net earnings therefore fell 21% to $125.9m in the period.
Looking to the remainder of the year, Conagra maintained its forecast for net sales to fall by 4-5%, adjusted operating margin of 15.3-15.5%, and adjusted EPS of between $1.65 and $1.70.
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