(Reuters) – Conagra Brands Inc forecast current quarter profit higher than Wall Street estimates on Thursday, betting on continued demand for its frozen dinners, cake mixes and snacks as the COVID-19 pandemic shows small signs of easing. .
Shares of the Chicago-based company were up 2% in premarket trading after Conagra also posted a 45% increase in second-quarter earnings.
With more cases in the US and signs of further pandemic-related slowdowns, shoppers have stocked pantries in preparation for potential blockages, prompting retailers to place more orders for Conagra long-shelf packaged foods.
This led to a surge in demand for products including Birds Eye frozen vegetables and Duncan Hines cake mixes, resulting in a 12.5% increase in sales at Conagra’s grocery and snack business and a 6% increase. 8% in its refrigerated and frozen unit.
Conagra said he continued to see a “sustained increase” in demand from its retail clients through the third quarter. According to IBES data, it expects adjusted earnings between 56 and 60 cents per share for the period, compared to analysts’ estimates of 57 cents per share from Refinitiv.
Organic sales are expected to increase between 6% and 8%, with adjusted operating margins of between 16% and 16.5%.
For the second quarter ended November 29, adjusted operating margins were 19.6%, primarily due to cost savings from rationalization of the supply chain.
Overall, the net income attributable to Conagra was $ 378.9 million, or 77 cents per share. Adjusted for one-off items, the company earned 81 cents per share, beating analysts’ average estimate of 73 cents per share.
Sales increased 6.2% to nearly $ 3 billion, in line with expectations.
Reportage by Nivedita Balu and Siddharth Cavale in Bengaluru; Montage by Krishna Chandra Eluri and Anil D’Silva