On January 4, 2024, Conagra Brands Inc (CAG, Financial) released its 8-K filing, detailing the financial results for the second quarter of fiscal year 2024, which concluded on November 26, 2023. The company, a leading packaged food entity known for brands like Marie Callender's, Healthy Choice, and Birds Eye, reported a decrease in net sales and gross profit amidst a challenging macro environment.
Financial Performance Overview
Conagra Brands Inc (CAG, Financial) reported a 3.2% decline in net sales to $3.2 billion for the quarter. The decrease in organic net sales by 3.4% was attributed to a 0.5% negative impact from price/mix and a 2.9% decrease in volume. Gross profit also saw a decrease of 8.2% to $847 million, with a gross margin reduction of 145 basis points to 26.4%. Selling, general, and administrative expenses increased by 6.8% to $398 million, influenced by an impairment and legal reserve adjustments.
Net income attributable to Conagra Brands decreased by 25.1% to $286 million, or $0.60 per diluted share, primarily due to the decrease in gross profit and increase in SG&A. Adjusted EBITDA decreased by 7.0% to $661 million, driven by the decrease in adjusted gross profit.
Segment Performance and Challenges
The Grocery & Snacks segment reported a 4.1% decrease in net sales, while the Refrigerated & Frozen segment saw a 5.8% decrease. The International segment, however, increased net sales by 8.1%, with organic net sales growth driven by strong performance in Mexico. The Foodservice segment reported a 4.3% increase in net sales, with operating profit increasing by 33.2% to $38 million.
Despite these challenges, Conagra Brands Inc (CAG, Financial) remains committed to investing in its brands, particularly in the frozen business, to generate market share gains and build momentum for the future.
Outlook and Adjustments
Conagra Brands Inc (CAG, Financial) has revised its fiscal 2024 outlook, lowering organic net sales growth, operating margin, and adjusted EPS expectations. The company now expects adjusted EPS to be between $2.60 and $2.65. This adjustment reflects year-to-date results, anticipation of a slower volume recovery, and increased brand investments.
Items affecting the comparability of EPS included approximately $0.02 per diluted share of net expense related to corporate hedging derivative losses and approximately $0.07 per diluted share of net expense related to an impairment of a business held for sale.
Conagra Brands Inc (CAG, Financial) will continue to navigate the complex market environment with a focus on strategic investments and operational efficiency to drive long-term growth.
Explore the complete 8-K earnings release (here) from Conagra Brands Inc for further details.
