Corporate Profiles - 2023 - 66

COMPANY overview
Conagra Brands, Inc.
C
Slower-than-expected volume recovery
affects full-year results
onagra Brands, Inc. entered 2023 with
three priorities - to remain disciplined
in pricing, reduce supply chain disruptions
and reap the benefits of productivity initiatives.
The company achieved each, according to management,
but fell victim to shifting consumer
purchasing patterns with a greater emphasis on
value that hindered the company's performance.
" Looking back at our priorities going into fiscal
'23, we're pleased to say that we delivered on
each of them, " said Sean M. Connolly, president
and chief executive officer, during a July conference
call with securities analysts to discuss fiscal
2023 results. " We continued our disciplined
pricing execution in the face of ongoing inflation,
which helped to drive margin recovery - a top
coming down as expected, but the rate of improvement
in volume recovery is lagging, " Mr.
Connolly said. " That suggests new consumer behavior
shifts beyond the initial elasticity effects
that occurred when pricing actions were initially
taken.
" We've seen this dynamic since just after Easter,
and it has been broad-based across many
categories and competitors. And importantly,
where we see it, it is usually not a trade down
to lower-priced alternatives within the category.
Rather, it's an overall category slowdown.
Mr. Connolly speculated that a busy summer
travel season may have contributed to the
slowdown and called the situation a temporary
behavior shift as consumers stretched their budgets.
Chief
executive officer -
Sean M. Connolly
priority coming into fiscal '23. Our supply chain
continued to improve as we made meaningful
progress on our cost savings initiatives, which in
turn led to a vast improvement in service levels. "
For fiscal year 2023, ended May 28, Conagra
Brands earnings fell 23% to $684 million, equal
to $1.43 per share on the common stock, from
$888 million, or $1.85 per share, the year before.
Annual sales rose 6% to $12.3 billion from
$11.5 billion.
Pressuring earnings was a slower-than-expected
improvement in volume.
" ... Food companies are starting to wrap pricing
in the year-ago period, and dollar sales are
66 \ October 2023
Conagra Brand's stock price closed at $33.29
per share on July 17 when the full-year results
were released and it has trended downward
since, closing at $29.10 at the close on Sept.
8. Compared to the same period of the previous
year, the stock price remains depressed. On Sept.
9, 2022, it closed at $34.37 per share.
For fiscal 2024, Conagra Brands guided organic
sales growth of approximately 1% and
adjusted earnings per share to be in a range of
$2.70 and $2.75.
During the July conference call to discuss the
fiscal 2023 results, Mr. Connolly outlined the
tailwinds and headwinds he saw impacting the
company during its upcoming fiscal year.
" Starting with the tailwinds, " he said. " In fiscal
'24, we will be wrapping the various discrete
supply chain disruptions that persisted throughout
the year.
" As the operating environment continues to
normalize, we will also benefit from the ongoing
advancement of our productivity initiatives,
and we expect our investments in innovation to
continue to deliver strong results, building upon
our track record of success. "
Headwinds, in addition to the shifting consumer
behaviors Mr. Connolly discussed, included
single-ingredient brands featuring dairy or
meat ingredients becoming deflationary. CP
Conagra Brands, Inc.
net income
(fiscal years ended in May)
in millions
2023
2022
2021
$684
$888
$1,299
Source: Conagra Brands, Inc.
Conagra Brands, Inc.
net sales
(fiscal years ended in May)
in millions
2023
2022
2021
$12,277
$11,536
$11,185
Source: Conagra Brands, Inc.
Conagra Brands, Inc.
share price
$41
Sept. 15, 2023 = $28.94
$36
$31
$26
HIGH =
Jan. 6, 2023 = $39.81
LOW =
Sept. 13, 2023 = $28.57
Sept. Nov.
2022
Jan.
2023
March May
Source: New York Stock Exchange
CONAGRA BRANDS, INC.
July
Sept.
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Corporate Profiles - 2023

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