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CAG NYSE· Conagra Brands Inc
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CAG NYSE· Conagra Brands Inc
Earnings report Q4 2023

CAG Reports Decrease in Net Sales in Q2 Fiscal 2024

Segments of revenue

In the second quarter of fiscal 2024, CAG experienced an overall decrease in net sales. This decline was primarily attributed to lower consumption trends, continued behavior shifts, and an increase in strategic trade investments. The net sales decline was observed across multiple segments, including Grocery & Snacks, Refrigerated & Frozen, and International. However, the Foodservice segment saw an increase in net sales.

Strengths

Despite the decrease in net sales, CAG demonstrated strengths in productivity and lower transportation costs, which partially offset the unfavorable operating leverage and moderate input cost inflation. The company also recognized higher equity method investment earnings, with improved product margins in Ardent Mills. These factors contributed to diluted earnings per share of $0.60 in Q2 fiscal 2024.

Challenges

CAG faced challenges in the form of lower volumes driven by inflation-driven pricing actions and supply chain disruptions. This resulted in a decrease in segment operating profit, particularly in the Grocery & Snacks, Refrigerated & Frozen, and International segments. Additionally, the company incurred higher selling, general, and administrative (SG&A) expenses due to items impacting comparability, including impairment charges related to a business held for sale and legal matters.

Noteworthy

It is worth noting that CAG experienced a decrease in gross profit primarily due to the net sales decline, input cost inflation, and unfavorable operating leverage. However, advertising and promotion expenses decreased compared to the previous year's quarter. Furthermore, the second quarter of fiscal 2023 included charges associated with a fire at one of CAG's manufacturing facilities, impacting operating profit.

Summary

CAG's performance in the latest quarter showed a decrease in net sales, driven by lower consumption trends and behavior shifts. Despite these challenges, the company demonstrated strengths in productivity, lower transportation costs, and higher equity method investment earnings. However, CAG faced weaknesses in lower volumes, unfavorable operating leverage, and increased SG&A expenses. The company's financial performance was impacted by inflation-driven pricing actions and supply chain disruptions. Overall, CAG's Q2 fiscal 2024 performance reflects a mixed bag of results, with both strengths and challenges influencing their revenue.

Source documents

Form 10-Q  filed on Jan 04, 2024
98 pages scanned

Reference data

Company financials Q4 revenue 3.21B
Analyst estimates Q4 EPS beat by 4.60%
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