Frozen and refrigerated food products figured positively in Conagra Brands’ 18.3% net sales increase to $2.8 billion and 1.6% organic net receipts gain during the second quarter of Fiscal 2020, which ended on November 24.
Net sales for the segment rose 28.8% to $1.2 billion in the quarter, with the acquisition of Pinnacle adding 28.1% of the growth and the divestiture of the Gelit business subtracting 1.7%. Organic net sales increased 2.4%. On an organic net sales basis, volume advanced 0.5% and price/mix increased 1.9%. The segment benefited from organic net sales growth across multiple brands, including frozen Birds Eye vegetable products, Healthy Choice ready meals, Marie Callender’s and P.F. Chang’s Home Menu.
The segment’s recently-launched innovations, including those within the Healthy Choice Power Bowls range and Marie Callender’s line, as well as second-half launches, are expected to benefit the second-half organic net sales growth rate as they build in-market distribution and velocity.
Operating profit for the segment increased 19.5% to $187 million in the quarter, and adjusted operating profit increased 29.6% to $216 million. The increases were primarily driven by the addition of Pinnacle’s profit and the benefit of cost synergies and realized productivity improvements, which more than offset higher input costs.
Sean Connolly, president and chief executive officer of the Chicago, Illinois, USA-headquartered diversified foods company commented:
“Our second quarter results reflect solid execution in applying the Conagra Way playbook across our portfolio. We maintained our strong momentum in frozen and snacks. We also made good progress on our large grocery brands, Hunt’s and Chef Boyardee, both of which made sequential improvements. We also continued to make very good progress on the Pinnacle integration, and we remain squarely on-track with our plans to improve key Pinnacle brands.”
He continued, “Our expectation for fiscal 2020 remains that first-half investments will result in strong second-half performance. The second-half is when we expect to see the greatest impact from new frozen and snacks innovation, continued smart promotional support in key grocery brands, the ongoing implementation of our Pinnacle action plan, and synergy capture.”
All divisions recorded positive results, with sales in the Grocery and Snacks segment advancing 14.2% to $1.1 billion. The International segment posted a 7.2% quarterly gain to $234 million, while the Foodservice segment was up 6.8% to $276 million.
Fiscal 2020 Outlook
Meanwhile, Conagra is updating its fiscal 2020 guidance primarily to reflect the divestiture of the DSD snacks business and the exit of its private label peanut butter business, the process of which began subsequent to the quarter close. The updated guidance includes the expected results from the Lender’s frozen bagel business for the full fiscal year.