Reuters — Conagra Brands said on Thursday it would increase prices again on its frozen meals and snacks to help cushion the blow of higher inflation, after the diversified food maker raised its annual sales forecast and topped quarterly results.
Packaged food companies are grappling with inflation as the U.S. economy rebounds, while spending heavily on freight and logistics to ease the strain on their supply chains due to the pandemic.
Conagra said it was facing rising costs of ingredients including edible oils, proteins and grains forcing it to increase prices on frozen goods by 3.5 per cent and on staple meals by 3.3 per cent.
The U.S.-based company sells over two dozen packaged food and snack brands in Canadian retail markets alone, including Pam, Chef Boyardee, Duncan Hines, Slim Jim, Aylmer, Orville Redenbacher, Gardein and Hunt’s.
Higher prices did not dissuade shoppers and the impact on demand had so far been “limited,” CEO Sean Connolly said, pointing to the company’s upbeat quarterly results.
“We didn’t just acquire new consumers, we kept them,” he said in the post-earnings call.
The company raised its full-year outlook for organic net sales, citing a stronger-than-expected consumer demand and additional pricing actions, accounting for elevated inflation levels. It raised its full-year gross inflation estimates to around 11 per cent from about nine per cent forecast earlier.
The company expects full-year sales growth of about one per cent compared with its previous forecast of about flat growth.
Net sales fell one per cent to $2.65 billion in the first quarter, edging past analysts’ expectations of $2.54 billion, according to Refinitiv IBES data (all figures US$).
On an adjusted basis, Conagra earned 50 cents per share, topping estimates of 49 cents per share.
— Reporting for Reuters by Deborah Sophia and Mehr Bedi in Bangalore.