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How Conagra Brands’ Segments Performed in Fiscal 3Q18

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What affected Conagra’s Grocery & Snacks division?

Conagra Brands’ (CAG) Grocery & Snacks segment witnessed a decline of 1.3% in fiscal 3Q18 to $0.8 billion due to lower volumes and pricing. During the quarter, the segment’s organic net sales decreased 6.3%. A higher-than-expected reduction in retailers’ inventory and lower shipments affected the segment’s volume in 3Q. Meanwhile, investments in distribution and consumer trials to drive consumption adversely impacted its pricing and mix.

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However, incremental sales from Angie’s BOOMCHICKAPOP, Duke’s, and BIGS contributed 5.0% to the segment’s net sales. Management remains upbeat thanks to the improving consumption trend. Meanwhile, Conagra expects incremental sales from acquired brands and innovation-led products to drive the segment’s top line in fiscal 2019.

Refrigerated and frozen sales continue to improve

Net sales of the company’s Refrigerated & Frozen segment continued to grow and marked an increase of 3.2% to $0.7 billion in 3Q.  Meanwhile, the segment’s organic net sales improved 2.6%, driven by higher volumes (+2%) led by strength in core business and innovation-led product launches including Healthy Choice, Marie Callender’s, and Banquet businesses. Moreover, pricing and mix improved 1%, driven by innovation offset in part by investments in brand building. Notably, the acquisition of Sandwich Bros contributed 60 basis points to the sales growth rate.

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International segment had a strong quarter

Conagra Brands’ net sales at its International segment increased 8.9% YoY to $0.2 billion. Organic sales increased 4%, driven by 1% volume growth and 3% improvement in pricing and mix. Meanwhile, favorable currency rates added 5% to the top-line growth rate.

Foodservice segment hit by lower volumes

Net sales at the Foodservice segment decreased 6% to $0.2 billion, reflecting a significant decline in volumes, partially offset by improved pricing and mix. The company’s planned exit from non-core and low-margin businesses adversely affected the segment’s volume in 3Q.

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