Conagra has reported a 30.3% net sales growth in the first quarter of fiscal year 2020, which ended on 25 August 2019, citing its acquisition of Pinnacle as part of the reason behind the growth.
In June last year, Conagra acquired Pinnacle Foods in a deal worth $10.9 billion, allowing it to expand its presence in the frozen food sector.
Conagra’s net sales can be broken down into a 35.8% increase from the acquisition of Pinnacle; a 3.7% net decrease from the divestitures of businesses such as Wesson oil and Canadian Del Monte; a 0.1% decrease from the impact of foreign exchange and a 1.7% decrease in organic net sales.
The American packaged foods giant reported net sales growth across all its business segments, covering: Grocery & Snacks, Refrigerated & Frozen, International and Foodservice.
With a portfolio that includes Birds Eye, Slim Jim and Hunts, Conagra posted a gross profit rise of 28.9% to $665m, which was primarily driven by the net impact of the addition of Pinnacle’s gross profit and cost synergies. Since the acquisition completion, the company has reduced debt by over $1 billion.
During the quarter, the international segment continued to benefit from growth in the snacks and frozen businesses but experienced weakness in the Puerto Rico export market and the Indian business, causing the net sales to fall below expectations.
Sean Connolly, president and chief executive officer of Conagra Brands said: “After one quarter, fiscal 2020 is on-track with our plan as we execute against each of the priorities we outlined previously: maintaining the momentum on Legacy Conagra, applying our value-over-volume playbook to Pinnacle, and delivering against our integration, synergy, and de-leveraging commitments.
“Our expectation for fiscal 2020 is that the investments we are making in the first half of the year, in particular the second quarter, will result in strong second half performance, with the impacts of new innovation in the frozen and snacks businesses, smart promotional support in key grocery brands, the continued implementation of our Pinnacle improvement plan, and the impact of synergy capture all greatest in the third and fourth quarters.”
The US packaged foods company reaffirmed its fiscal 2020 guidance with the expectation of stronger growth in the second half of the fiscal year. The guidance includes expected full-year results from the Direct Store Delivery (DSD) snacks business which Conagra announced it was selling to earlier this month, after the quarter ended. The offload transaction of DSD snacks business is expected to be completed before the end of the calendar year.
© FoodBev Media Ltd 2019