Conagra Brands Reports Decrease in Net Sales, Increase in Net Income Despite Challenging Market Environment

Conagra Brands, Inc. reported its financial results for the thirteen weeks ended August 25, 2024, revealing a decrease in net sales but a significant increase in net income compared to the same period in the previous fiscal year. Net sales totaled $2,794.9 million, down from $2,904.0 million for the thirteen weeks ended August 27, 2023, reflecting a 3.8% decline. This decrease was attributed to increased strategic trade investments and reduced volume across several segments, including Grocery & Snacks, Refrigerated & Frozen, and Foodservice.

Despite the drop in sales, net income surged to $466.9 million, compared to $319.9 million in the prior year, driven by a substantial income tax benefit of $138.9 million, which contrasted with an expense of $98.3 million in the previous year. The earnings per share (EPS) also improved, with diluted EPS rising to $0.97 from $0.67.

The company’s operating profit for the quarter was $493.8 million, a decrease from $525.7 million in the same quarter last year. Segment performance varied, with the International segment showing a notable increase in operating profit, while Grocery & Snacks and Refrigerated & Frozen segments experienced declines. The Grocery & Snacks segment reported net sales of $1,182.7 million, down 1.7%, while the Refrigerated & Frozen segment saw a 5.7% decrease to $1,086.4 million.

Conagra made strategic moves during the quarter, including the acquisition of Sweetwood Smoke & Co. for $180.2 million and a co-manufacturer for cooking spray products for $50.2 million. These acquisitions contributed positively to the Grocery & Snacks segment, although their overall impact on earnings was not material through the reporting period.

Cash and cash equivalents increased to $128.7 million from $77.7 million at the end of the previous quarter. However, cash flows from operating activities decreased significantly to $268.6 million from $443.5 million, primarily due to lower operating profits and changes in working capital. The company also reported a net loss of $2.3 million from the sale of a 51.8% stake in Agro Tech Foods Limited, which generated net proceeds of $76.8 million.

Conagra's total current assets rose to $3,416.2 million, while total current liabilities increased to $3,646.8 million. The company’s long-term debt remained stable at $7.51 billion, with a fair value estimated at $7.52 billion. The company continues to maintain compliance with financial covenants under its revolving credit facility, which has a maximum principal amount of $2.0 billion.

Overall, Conagra Brands, Inc. navigated a challenging market environment with strategic acquisitions and a focus on improving profitability, despite facing declines in net sales across key segments.