Due to disappointing earnings throughout 2024, Chicago, Illinois, U.S.A.-based global food supplier Conagra Brands is lowering its earnings outlook for the remainder of its fiscal 2025 year.
In the earnings report for its second fiscal quarter of 2025, released on 19 December, Conagra reported that its gross profit was flat at USD 847 million (EUR 811 million), and its adjusted gross profit decreased 2.3 percent year over year to USD 842 million (EUR 806.6 million).
“Productivity and higher organic net sales were offset by the negative impacts of cost of goods sold inflation and unfavorable operating leverage,” the company said.
Reported diluted earnings per share fell 1.7 percent to USD 0.59 (EUR 0.57), and adjusted earnings per share declined 1.4 percent to USD 0.70 (EUR 0.67) in the period.
Operating profit for Conagra’s Refrigerated and Frozen segment plummeted 53.4 percent to USD 103 million (EUR 98.7 million), while sales in the segment were flat at USD 1.3 billion (EUR 1.2 billion) compared to the second quarter of the 2024 fiscal year.
As a result, the company is updating its fiscal 2025 guidance, expecting organic net sales to fall around 1.5 percent or remain flat compared to FY 2024.
“While momentum remains strong, we expect the business to be impacted by two headwinds in the back half, including higher-than-expected inflation and unfavorable foreign exchange rates, leading us to update our fiscal 2025 outlook,” Conagra President and CEO Sean Connolly said.
Despite the negative change to its earnings outlook, executives at Conagra, which manufactures frozen seafood brands Mrs. Paul’s and Van de Kamp’s, said they expect to see growth in seafood and other protein products as the fiscal year progresses.
One reason for the optimism, according to the company, is that there has been a recent surge in shoppers utilizing Glucagon-like Peptide-1 (GLP-1) medications for weight management and diabetes.
Those consumers – nearly 15 million Americans – are increasingly seeking smaller portions of food that are higher in protein and fiber, according to Conagra. In turn, this trend is leading more shoppers to purchase frozen, single-serve seafood and chicken entrees and appetizers, along with other higher-protein meals and apps.
“The biggest [trend] is the introduction of GLP-1 medications. We are really seeing this as an … opportunity for many of our businesses,” Conagra Director of Predictive Science Megan Bullock said during a call previewing the company’s new “Future of Frozen Food 2025” report.
The food supplier’s Shark Bites product, made with Alaskan pollock and launched earlier this year under both the Van de Kamp’s and Mrs. Paul’s brands, is one such item that could benefit from the trend, according to Conagra Senior Vice President of Demand Science Bob Nolan.
“As we started to look at the generations, we saw huge use of chicken nuggets with families, especially small children. But, it wasn’t that much with fish sticks, and it wasn’t that much with older kids and not younger kids,” Nolan said. “We saw it was an opportunity to launch Shark Bites, [adding] a little bit of fun choices of the sea [to what is] out there.”
Shark Bites also fits nicely into one of Conagra’s other top five frozen food trends: the growth of “bites and minis,” according to Nolan.
Sales of products in this segment – which include frozen seafood, chicken bites, small cuts of steak, mini desserts, and more – surged 31 percent over the past year, amassing USD 2.4 billion (EUR 2.3 billion) in sales, according to Circana data cited in the Future of Frozen Food 2025 report.
“People are eating snack-type items … using three or four snacks to make one plate,” Bullock said.
Additionally, frozen foods higher in protein are on a growth trajectory across all of Conagra’s brands, including Mrs. Paul’s, Van de Kamp’s, Gardein, Banquet, and P.F. Chang’s, according to Nolan.
“Protein for us has been a trend for the past six or seven years. It started probably a little bit with a keto [diet] slant to it, and as keto began to fade a little bit, protein stayed very strong across the board,” Nolan said. “We anticipate it will continue growing.”
To ensure consumers know which products are particularly high in protein, Conagra has introduced a new “On Track” badge, which will be added to 26 of its Healthy Choice brand of items in January 2025.
The badge indicates that the products are high in protein, contain a low calorie count, and are a good source of fiber, which makes them GLP-1 friendly.
Conagra is open to using the On Track badge on other brands, too, a spokesperson told SeafoodSource.
