Conagra Brands releases first quarter results
Conagra Brands has released it first quarter results for fiscal year 2024, that ended on August 27, 2023.
According to the global branded food maker, its first quarter net sales were flat to the prior year; organic net sales decreased 0.3%, with an operating margin in the quarter being 16.8% representing a 1,757 basis point increase over the prior year quarter. Adjusted operating margin was 16.7% representing a 297 basis point increase over the prior year quarter.
In the quarter, net sales were $2.9 billion, which according to Conagra Brands came in a 0.3% increase from the favorable impact of foreign exchange but with a 0.3% decrease in organic net sales.
The 0.3% decrease in organic net sales was driven by a 6.6% decrease in volume largely due to industry-wide slowdown in consumption and recent consumer behavior shifts, partially offset by a 6.3% improvement in price/mix.
Gross profit increased 14.3% to US$823 million in the quarter, and adjusted gross profit increased 10.9% to US$801 million. First quarter gross profit increased primarily because of inflation-driven pricing that was implemented in fiscal 2023 and productivity, which more than offset the negative impacts of cost of goods sold inflation, unfavorable operating leverage, and lower organic net sales. Gross margin increased 354 basis points to 28.3% in the quarter, and adjusted gross margin increased 272 basis points to 27.6%.
"I am proud of our team for delivering another quarter of strong margin recovery and EPS growth despite facing industry-wide macro dynamics that have affected consumer purchasing behavior and elongated the volume recovery period,” says Sean Connolly, president and chief executive officer of Conagra Brands, of the results. “We will continue to focus on executing our Conagra Way playbook as we make targeted and disciplined investments throughout the remainder of the year to drive the top-line. We are reaffirming our guidance for fiscal 2024, reflecting confidence in our plans, people and agility as we continue to navigate a shifting consumer environment."
Other Highlights
In the grocery and snacks segment Conagra Brands that for the first quarter reported and organic net sales increased 1.2% to US$1.2 billion in the quarter driven by a price/mix increase of 5.6%, partially offset by a volume decrease of 4.4% from industry-wide consumption trends. In the quarter, the company gained dollar share in snacking categories including seeds and microwave popcorn, and some staples categories including chili and canned meat.
Operating profit for the segment increased 3.3% to US$259 million in the quarter. Adjusted operating profit increased 3.8% to US$264 million as higher organic net sales and productivity more than offset the negative impacts of cost of goods sold inflation, unfavorable operating leverage, and higher A&P and SG&A.
In the refrigerated and frozen segment reported and organic net sales decreased 4.6% to US$1.2 billion in the quarter due to a volume decrease of 10.5% from industry-wide consumption trends, partially offset by a price mix increase of 5.9%. In the quarter, the company gained dollar share in categories such as frozen sides and frozen breakfast sausage.
Operating profit for the segment was US$199 million in the quarter compared to a US$216 million loss in the prior year quarter. Adjusted operating profit increased 14.7% to US$201 million as productivity and lower A&P more than offset the negative impacts of lower organic net sales, unfavorable operating leverage, cost of goods sold inflation, and increased SG&A.
Reported and organic net sales for the Foodservice segment increased 5.2% to US$289 million in the quarter. Price/mix increased 10.3% and volume decreased 5.1%, primarily from the elasticity impact of the company's inflation-driven pricing actions. Operating profit for the segment was US$44 million compared to US$1 million in the prior year quarter. Adjusted operating profit increased 87.5% to US$41 million in the quarter as the benefits of higher organic net sales and productivity more than offset the impacts of cost of goods sold inflation and unfavorable operating leverage.
