Conagra Brands, manufacturer of Mrs. Paul’s and Van de Kamp’s, realized a sales increase in its fiscal fourth quarter, but its gross profit fell, capping of a year of lower profits.
It’s sales volumes also fell in the fourth quarter and throughout the year, due to inflation.
Conagra has raised prices on its products due to higher input costs and supply chain issues, starting in July 2021. Conagra expected prices for nearly all of its food products – both within retail and foodservice – to increase, Conagra Brands Manager of Corporate Communications Tim Wronga told SeafoodSource last July.
While net sales rose 6.2 percent to USD 2.9 billion (EUR 2.89 billion) in Conagra’s fourth quarter, volumes dropped 6.4 percent. “The volume decrease was primarily a result of the elasticity impact from inflation-driven pricing action,” Conagra said in a press release.
The supplier’s gross profit also decreased 1.1 percent in the quarter, while adjusted gross profit rose 0.3 percent.
“Gross profit in the quarter benefited from higher organic net sales, supply chain realized productivity, lower COVID-19 pandemic-related expenses, and cost synergies associated with the Pinnacle Foods acquisition,” Conagra said.
However, those benefits were not enough to offset the impacts of cost of goods sold, inflation of 17.3 percent, and the lost profit from its Sold Business, Conagra said. Adjusted gross margin decreased 147 basis points to 24.9 percent in the quarter.
For fiscal year 2022, Conagra’s net sales increased 3.1 percent, while gross profit declined 10.7 percent.
Earnings per share dropped 30.8 percent for the year, driven by a decrease in adjusted operating profit, Conagra said.
The company said it expects its full-year adjusted profit per share to grow by only 1 percent to 5 percent, compared with analyst expectations of an 8.26 percent growth due to an anticipated gross inflation in the low-teen percentage range for the year, per Reuters.
Sean Connolly, Conagra Brands’ president and CEO, put a positive spin the earnings report.
“Throughout fiscal 2022 our team took decisive actions to offset inflation and invest in our business. I'm pleased that our brands continued to resonate with consumers, and we continued to grow share,” he said. "I was also pleased to see margin improvement materialize in the fourth quarter in Grocery & Snacks and Foodservice. This represents an important inflection that we expect will extend to our Refrigerated & Frozen and International businesses as fiscal 2023 progresses.”
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