By Dhirendra Tripathi
Investing.com – Conagra Brands (NYSE:CAG) stock traded 2% higher Thursday after the company raised its annual forecast for organic net sales despite cost pressures.
The company now expects core net sales for the year to grow by more than 4% compared to its previous forecast of over 3%.
Growing economies and strained supply chains have all combined to push transportation costs higher. Prices of ingredients such as corn, wheat, proteins, and edible oils have touched record highs. Companies have hiked prices to pass on cost pressures and met with mixed success.
Because of the lag in the implementation of the price hikes, the company does not expect to fully offset the cost pressures in the current financial year. With inflationary expectations now pegged higher, it expects adjusted operating margins to take a hit of 1 percentage point to be around 14.5%.
Adjusted profit per share should come in at around $2.35, lower than the previous forecast of $2.5, according to the company’s new forecast.
Challenges notwithstanding, the company grew its net revenue by over 5% to $2.91 billion in the third quarter ended February 27. Margins eroded.
Adjusted profit per share fell 1.7% to 58 cents but was higher than estimates.