Frozen Product Demand Boosts Conagra Third Quarter Sales
The Refrigerated & Frozen division of Conagra Brands in the United States performed well in the third quarter of FY 2018 despite rising commodity and transportation costs, as net sales in the segment rose 3.2% to $689 billion.
Total revenue generated by all business enterprises of the Chicago-headquartered consumer foods company during the three-month period ending on February 25 amounted to $1.99 billion – up 0.5% year-on-year. Net income more than doubled to $362.8 million, helped by a $236.7 million bump related to US tax reforms in addition to better sales of frozen food products.
“Our frozen portfolio, where we put most of our innovation focus this year, continues to show strong growth and share gains,” said Sean Connolly, president and chief executive officer.
Organic net sales rose 3% behind volume growth of 2%, driven by core business improvements and innovation launches in the Marie Callender's, Healthy Choice and Banquet ranges of frozen ready meals and side dishes. Price/mix increased 1% as mix improvements from recent innovation more than offset investments with retail customers to drive brand saliency, enhance distribution, and stimulate consumer trial.
“We think we have a lot of room to go from here, as our distribution performance continues to improve and dollar sales growth has followed,” said Connolly. “Banquet is the number one brand in frozen single-serve meals by volume, providing American classics to more than 40 million households. Healthy Choice competes very effectively and has had a makeover to focus on active lifestyle. And Marie Callender's is known for its comfort food.”
Operating profit in the Refrigerated & Frozen segment, however, decreased 2% in the quarter. Adjusted operating profit slipped 1% as the benefits of net sales growth and supply chain realized productivity savings were more than offset by increased input costs and transportation expenses.
Net sales and operating profit in other segments of the business were reported as follows: Grocery & Snacks – down 1% to $838 million as profit decreased 13%; International – up 9% to $223 million as operating profit surged 67%; Foodservice – down 6% to $244 million as profit fell 13%.
Earnings per share (EPS) of $0.61 in Q3 beat the forecast by $0.05%. For fiscal 2018, the company now expects adjusted EPS to be in the range of $2.03 to $2.05, above the previously estimated range of $1.95 to $2.02. Shares closed at $35.61, up approximately 1.6%, on the day that third quarter results were posted. Shares were quoted at $35.50 when the New York Stock Exchange bell rang to close the trading week on March 23.