(Reuters) – Conagra Brands Inc raised its annual forecasts on Thursday, after handily beating expectations for quarterly profit, as it mainly benefited from higher prices for its snacks and ready-to-eat meals.
Shares of the company, known for its brands Birds Eye and Chef Boyardee, rose about 4% in premarket trading.
Companies across the packaged food industry in North America have undergone multiple rounds of price increases in the past year to shield their profit margins from higher costs associated with labor, freight and raw materials.
But people have accepted the higher prices with little push back, as they find eating out far more expensive than cooking at home.
Conagra’s upbeat results follow peers Campbell Soup Co, General Mills Inc and Kellogg Co, who have also echoed in recent months that price hikes have not yet dented demand significantly for them.
On Thursday, Conagra forecast a 7% and 8% rise in full-year 2023 organic sales, which excludes impact from foreign exchange, divested businesses and acquisitions, compared with the previous expectation of 4% to 5% growth.
The company also said it now expects adjusted profit per share for the year to rise between 10% and 14%, compared with 1% to 5% growth it had forecast earlier.
Conagra said its higher average selling prices boosted organic sales by 17%, offseting an 8.4% decline in sales volumes in the second quarter.
Excluding one-time items, Conagra earned 81 cents per share in the quarter ended Nov. 27, above analysts’ average estimate of 66 cents per share, according to Refinitiv IBES data.
Net sales rose to $3.31 billion, while analysts had expected $3.28 billion in sales.
(Reporting by Granth Vanaik in Bengaluru; Editing by Shinjini Ganguli)
