In a January 5th Form Q-10 filing, Conagra Brands (CAG) released results for the second quarter of Fiscal 2023 ending November 27th. The Company can be regarded as representative of the manufacturing and packaged food sector with competitors including Post Holdings and Kraft-Heinz all currently under pressure to reduce prices to the major retail and supermarket chains. In an inflationary environment consumers are turning to less expensive private brands although the trend to eat-at-home will benefit Conagra Brands.
For the second quarter of 2023, net income was $382.2 million on total revenue of $3,313 million with a diluted EPS of $0.79. Comparable figures for the second quarter of Fiscal 2022 ending November 28th 2021 were net income of $275.9 million on total revenue of $3,059 million with a diluted EPS of $0.57.
The release included results for the four operating segments:-
- Foodservice: Operating profit of $28.5 million on revenue of $283 million (up 15% from Q2 FY 2022)
- Refrigerated and Frozen: Operating profit of $250 million on revenue of $1,422 million (up 11%)
- International: Operating profit of $37 million on revenue of $259 million (down 1%)
- Groceries and Snacks: Operating profit of $340 million on revenue of $1,350 million (up 7%)
For the second quarter of FY 2023 (with the comparable values for the corresponding quarter of FY 2022 in parentheses), Conagra Brands achieved a gross margin of 27.8 percent (24.7); operating margin of 16.2 percent (13.4). Sales increased by 8.3 percent.
Sean Connolly CEO stated "We are raising our fiscal 2023 guidance on all metrics - organic net sales growth, adjusted operating margin, and adjusted earnings per share due to continued positive business momentum and our strong first half performance". Guidance for FY 2023 included organic net sales growth of 7 to 8 percent, up from 4 to 5 percent; An adjusted operating margin increase of 15 percent and EPS growth of between 10 and 14 percent up from 1 to 5 percent.
Conagra Brands listed assets of $22,414 million, including $14,759 million goodwill and intangibles, against long-term debt and other obligations of $9,953 million. The Company had an intraday market capitalization of $18,520 million on January 5th. CAG trades with a forward P/E of 15.5 and has ranged over a 52-week period from $30.06 to $40.78 with a 50-day moving average of $37.05. Twelve-month trailing operating margin is 13.8 percent and profit margin, 4.9 percent. The Company generated a return on assets of 4.5 percent and 6.7 percent on equity.