UPDATE 3-Conagra Brands expects weak annual profit on rising costs

Conagra Brands, Inc. +1.29%

Conagra Brands, Inc.

CAG

15.72

+1.29%

Annual net sales expected at midpoint of prior forecast range, company says

Conagra anticipates 7% cost inflation in fiscal 2026, including tariffs, before mitigation actions

Quarterly revenue narrowly beats estimates, but earnings miss by 1 cent

Shares down about 3%

Updates shares, adds analyst comments in paragraphs 11-13

By Neil J Kanatt and Sanskriti Shekhar

April 1 (Reuters) - Conagra Brands CAG.N said on Wednesday annual profit would come in at the low end of its forecast range due to elevated costs in a volatile macroeconomic environment.

Rising costs linked to the Iran war are intensifying macroeconomic pressures, driving up expenses for food companies already navigating higher input costs and changing dietary preferences.

Shares of the Hunt's ketchup maker were down about 3% in early trading.

Conagra had previously planned price raises to offset higher costs of ingredients such as cocoa, olive oil, and palm oil, as well as tariffs on tin-plate steel. Prices rose 1.9% for the third quarter.

The company now expects annual adjusted profit per share of $1.70, at the bottom of its previous forecast range of $1.70 to $1.85.

Conagra said it still expects costs to remain elevated in fiscal 2026, with inflation of about 7%, including tariffs, before accounting for mitigation actions.

It expects annual net sales at the midpoint of its previous forecast of a 1% decline to a 1% rise.

Peer General Mills GIS.N reaffirmed its annual targets recently, while Campbell CPB.O cut its annual sales and profit forecasts.

"This is not an easy operating environment," CEO Sean Connolly said in a statement.

Conagra reported a quarterly revenue decline of 1.9% to $2.79 billion, narrowly beating analysts’ estimates of $2.76 billion, while adjusted earnings per share of 39 cents missed estimates by 1 cent, according to data compiled by LSEG.

The company posted quarterly organic sales growth of 2.4% after several muted quarters. Jefferies analysts said that was thanks to a recovery from last year's supply-chain disruption and retailer inventory adjustments.

"Given the challenging industry backdrop, the return to organic growth is a notable win," CFRA analyst Arun Sundaram said.

"That said, sustaining this momentum will likely require continued reinvestment, which could keep margins under pressure."


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