ConAgra (CAG 33.98, -2.08) has slid 5.8% after missing earnings expectations and issuing cautious guidance for the current quarter.
The food processing company reported below-consensus first quarter earnings of $0.47 per share on a 1.7% year-over-year increase in revenue to $1.83 billion, which was just below market expectations.
In addition to missing estimates, ConAgra issued cautious guidance for the second quarter, expecting below-consensus earnings between $0.57 per share and $0.60 per share. Organic net sales growth is expected to be flat or slightly down when compared to the same period one year ago.
ConAgra reaffirmed its revenue guidance for the fiscal year, priming the market for sales between $7.98 billion and $8.06 billion. The midpoint of the company's guidance matches current market expectations.
Returning to first quarter results, organic net sales increased 1.2%. The growth rate excludes the impact of the sale of the company's production facility in Trenton, Missouri. Organic net sales growth was recorded in all four of the company's segments.
Grocery & Snacks net sales grew 3.4% to $771 million while organic net sales increased 0.1%. The growth rates were supported by the contribution from the acquisition of Angie's BOOMCHICKAPOP while volume increased 0.1%. Price/mix was flat when compared to the previous year, as favorable pricing and mix were offset by a shift away from advertising and promotion investments to retailer investments. Adjusted segment operating profit declined 2.1% due to higher transportation costs, input costs, and higher selling, general, and administrative expenses, which offset higher net sales and improved productivity in the supply chain.
Refrigerated & Frozen net sales grew 3.2% to $635 million while organic net sales increased 1.4%. The acquisition of Sandwich Bros of Wisconsin added 180 basis points to the net sales growth rate. Volume increased 0.5%, as new product launches outweighed declines in certain refrigerated businesses. Price/mix improved 0.9% due to higher pricing and mix, which were partially offset by increased retailer investments. Adjusted operating profit declined 6.3% due to higher input costs and transportation expenses.
International net sales increased 1.5% to $194 million while organic net sales rose 6.3%. Volume grew 4.4% due to strength in snacks businesses in Canada and Mexico. Improved pricing led to a 1.9% increase in price/mix. Adjusted operating profit grew 43.4% due to higher net sales and strong realized productivity, which outweighed higher input costs and foreign exchange headwinds.
Foodservice net sales fell 6.9% to $234 million while organic sales, excluding Trenton, ticked up 0.1%. Volume declined 5.0% due to planned discontinuations of lower-performing businesses. Price/mix increased 5.1%. Operating profit increased 18.7% as improved price/mix and productivity outweighed higher input and transportation costs.