Conagra Brands reported a 1.7% dip in net sales of $3.3 billion results for the third quarter of fiscal year 2024, which ended on February 25. Net income fell to $308.6 million. The Chicago, Illinois-headquartered food company’s operating margins was 15.5% during the period, representing a 33 basis point decrease over the prior year quarter. Adjusted operating margin was 16.4% representing a 49 basis point decrease over the prior year quarter.
“Our Q3 results demonstrate steady progress stemming from strong execution. Volume trends in our domestic retail business continued to improve as targeted investments, particularly in frozen, generated strong lifts and unit share gains,” said President and CEO Sean Connolly. “Outstanding progress on our cost savings initiatives allowed us to support strategic investments in our brands while sustaining margin recovery. We also continued to deliver substantial improvements in free cash flow enabling us to meaningfully reduce our net leverage ratio over the first three quarters of 2024.”
Reported and organic net sales in the Refrigerated and Frozen segment decreased 8.1% to $1.2 billion in the quarter as price mix fell 4.8%, primarily attributable to an increase in strategic investments. Volume decreased 3.3%, primarily due to continued lower consumption trends. Dollar share was gained in categories such as frozen side dishes, single-serve meals, breakfasts and seafood.
Operating profit for the segment decreased 23.6% to $202 million in the quarter. Adjusted operating profit decreased 25.2% to $203 million as higher productivity was more than offset by the negative impacts of lower organic net sales, cost of goods sold inflation, unfavorable operating leverage, and higher A&P and SG&A.
Connolly was pleased to report that frozen single-serve meals achieved record market share of 51.2% during Q3, an improvement from 50.8% in the second quarter and from 49.5% in the same period a year ago. The strongest performances came up its largest brands, among them Healthy Choice, Marie Calendars, Banquet, P.F. Chang’s and Home Menu.
On the frozen vegetables front, Connolly pointed out that previously there was a trend toward trading down among price-conscious shoppers – initially from fresh vegetables to frozen vegetables, then from frozen to canned vegetables, “despite the obvious quality trade-offs.” This began to change following new advertising campaigns for the Birds Eye brand, and now Conagra’s marketing team seeing a “come back” in frozen vegetable sales.
