CAG ConAgra Brands Inc

By Annie Gasparro 

Conagra Brands Inc., the maker of Hunt's ketchup and Slim Jim meat snacks, said it expects a higher annual profit this year despite rising costs for ingredients and shipping.

For its fiscal year ending in May, Conagra projects adjusted earnings of up to $2.05 per share, up from previous guidance of around $1.89 per share.

Chief Executive Sean Connolly said Conagra's investments in marketing its products and introducing new ones have helped sales.

"Our efforts are paying off, and our businesses are gaining momentum," he said.

Shares rose 1.2% in early Thursday morning trading.

Conagra's comparable sales fell 2.2% in the latest quarter, as growth in its refrigerated and frozen foods, such as Healthy Choice entrees, was offset by declines in its dry goods segment, which include Peter Pan peanut butter and Orville Redenbacher's popcorn.

Like its peers, such as General Mills Inc. and Campbell Soup Co., Conagra is grappling with higher food costs and a shortage in trucking capacity in the U.S. In the latest quarter, its adjusted gross margin fell to 30%, from 31.6% in the prior year. But Conagra is working to offset that with productivity savings, and had warned about the impact of rising costs last month.

Conagra has been modernizing some of its older brands like Reddi-wip dessert topping and Hebrew National hot dogs to make them relevant to Americans who have shifted to newer, smaller brands that they see as fresher and healthier. Comparable sales of its refrigerated and frozen foods, where most of that work has focused, rose 3% in the quarter.

Sales of Conagra's dry groceries are still struggling. Sales fell 6% on a comparable basis, though that was also partly because retailers were selling through existing inventory that Conagra had shipped in the prior quarter when stores were stocking up ahead of last fall's hurricanes.

Conagra has also acquired smaller brands that reflect the latest eating trends toward snacks and fresher food. Conagra bought Angie's Boomchickapop, a flavored popcorn, and Sandwich Bros., a Wisconsin-based frozen mini-sandwich business.

Net income for the latest quarter rose to $362.8 million. Excluding nonrecurring items, such as the benefit of a lower tax from recent tax legislation, adjusted earnings per share came to 61 cents, above analysts' projection of 56 cents, according to FactSet. Revenue rose 0.7% to $1.995 billion, in line with analysts' expectations.

Write to Annie Gasparro at annie.gasparro@wsj.com

(END) Dow Jones Newswires

March 22, 2018 09:52 ET (13:52 GMT)

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