Net sales for Conagra’s frozen & refrigerated segment increased 28.8% to USD1.2bn during the second quarter of fiscal year 2020, which ended on November 24, 2019. The acquisition of Pinnacle added 28.1% of the next sales growth and the divestiture of the Gelit business subtracted 1.7%, revealed the company during its latest financial results announcement.
Additionally, organic sales increased by 2.4%. On an organic net sales basis, volume increase 0.5% and price/mix increased 1.9%. The segment benefited from organic net sales growth across multiple brands, including Birds Eye, Healthy Choice, Marie Callender’s and P.F. Chang’s Home Menu. The segment’s recently-launched innovations, including those within the Healthy Choice Power Bowls line and Marie Callender’s brand, as well as second-half launches, are expected to benefit the segment’s second-half organic net sales growth rate as they build in-market distribution and velocity.
Operating profit in the segment increased 19.5% to USD187m in the quarter, and adjusted operating profit increased 29.6% to USD216m.
The increased were primary driven by the addition of Pinnacle’s profit and the benefit of cost synergies and realized productivity improvements, which more than offset higher input costs. The company’s integration of Pinnacle remained on-track in the quarter, with approximately USD42m of incremental cost synergies realized in the quarter, bringing total cumulative cost synergy realization to USD112m from the closing of the acquisition through the end of the second quarter.
“Our second quarter results reflect solid execution in applying the Conagra Way playbook across our portfolio. We maintained our strong momentum in frozen and snacks. We also continued to make very good progress on the Pinnacle integration, and we remain squarely on-track with our plans to improve key Pinnacle brands,” explained Sean Connolly, president and chief executive officer of Conagra Brands.
Connolly continued to say that the company’s expectation for fiscal 2020 remains that first-half investments will result in strong second-half performance. The second-half is when the greatest impact from new frozen and snack innovation is expected to manifest.
Overall in the quarter, net sales increased 18.3% to USD2.8bn. Reported net sales growth primarily reflects:
- a 19.6% increase from the acquisition of Pinnacle.
- a 2.9% net decrease from the divestitures of the Wesson oil business, the Gelit business, and the DSD snacks business.
- a 1.6% increase in organic sales.