Conagra Brands Inc (CAG.N) said on Thursday it would increase prices again on its frozen meals and snacks to help cushion the blow of higher inflation, after the diversified food maker raised its annual sales forecast and topped quarterly results.
Packaged food companies are grappling with inflation as the U.S. economy rebounds, while spending heavily on freight and logistics to ease the strain on their supply chains due to the pandemic.
Conagra said it was facing rising costs of ingredients including edible oils, proteins and grains forcing it to increase prices on frozen goods by 3.5% and on staple meals by 3.3%. The company makes Marie Callender’s pulled pork mac and cheese bowls and Healthy Choice meals.
Higher prices did not dissuade shoppers and the impact on demand had so far been “limited,” Chief Executive Officer Sean Connolly said, pointing to the company’s upbeat quarterly results.
“We didn’t just acquire new consumers, we kept them,” he said in the post-earnings call.
The company raised its full-year outlook for organic net sales, citing a stronger-than-expected consumer demand and additional pricing actions, accounting for elevated inflation levels. It raised its full-year gross inflation estimates to around 11% from about 9% forecast earlier.
The company expects full-year sales growth of about 1% compared with its previous forecast of about flat growth.
Net sales fell 1% to $2.65 billion in the first quarter, edging past analysts’ expectations of $2.54 billion, according to Refinitiv IBES data.
On an adjusted basis, Conagra earned 50 cents per share, topping estimates of 49 cents per share.