(Reuters) -Conagra Brands Inc raised its annual forecast for organic net sales and topped quarterly result expectations on Thursday, as the Slim Jim beef jerky maker’s move to increase prices for its frozen meals and snacks cushioned the blow of rising raw material costs.
Conagra, like its peers Campbell Soup Co, Kraft Heinz Co and Unilever PLC, has been bumping up product prices in recent months to offset higher costs of raw materials including edible oils, sugar and coffee amid a resurgent U.S. economy.
The company raised its full-year outlook for organic net sales, saying it now expects a growth of about 1%, compared with its previous forecast of about flat growth.
It cited a stronger-than-expected consumer demand as well as additional planned pricing actions, taking into account elevated inflation levels, for lifting its sales outlook. The company raised its expectations for full-year gross inflation to around 11% from about 9% forecast earlier.
Though the at-home cooking trend is expected to last even as restrictions ease, Conagra and its peers would find it difficult to repeat last year’s unprecedented rise in sales, according to analysts.
The Chicago-based company reported a 4.9% drop in sales of groceries and snacks in the first quarter, while sales at its frozen foods division fell 2.5%, after soaring last year due to a pandemic-induced surge in pantry stocking.
It reported net sales of $2.65 billion in the first quarter, compared with $2.68 billion a year earlier, beating analysts’ average estimate of $2.54 billion, according to Refinitiv IBES data.
Net income attributable to Conagra fell to $235.4 million, or 49 cents per share, in the quarter ended Aug. 29, from $329 million, or 67 cents per share, a year earlier.
On an adjusted basis, Conagra earned 50 cents per share, topping estimates of 49 cents per share.
(Reporting by Deborah Sophia and Mehr Bedi in Bengaluru; Editing by Vinay Dwivedi)