Executive Summary
In the second quarter of fiscal 2025, Conagra Brands Inc exhibited positive momentum with a notable shift back to growth in revenue and increased market shares across several key product segments. The company reported a revenue of $3.2 billion, a slight year-over-year increase of 0.3%, reaffirming its market strength despite prevailing economic challenges such as heightened inflation and adverse exchange rates. A sustained focus on brand innovation and strategic investments has driven this resurgence, particularly in the frozen and snacks segments, where share performance outpaced peers significantly. Management expressed confidence in continuing to build on this momentum through their ongoing strategic initiatives, while adjusting their guidance for the remainder of the fiscal year due to inflationary pressures and foreign exchange complexities.
Key Performance Indicators
QoQ: -39.05% | YoY:-0.59%
Key Insights
Conagra reported a revenue of $3.2 billion for Q2 2025, reflecting a year-over-year increase of 0.3% and a quarter-over-quarter growth of 14.32%. The company's gross profit reached $846.7 million, translating to a gross profit margin of approximately 26.4%, which showcases a slight decline compared to prior periods. Operating income stood at $402.6 million, with an operating margin of 12.6%. Net income for the quarter amounted to $284.5 million with diluted EPS of $0.59, both reflecting min...
Financial Highlights
Conagra reported a revenue of $3.2 billion for Q2 2025, reflecting a year-over-year increase of 0.3% and a quarter-over-quarter growth of 14.32%. The company's gross profit reached $846.7 million, translating to a gross profit margin of approximately 26.4%, which showcases a slight decline compared to prior periods. Operating income stood at $402.6 million, with an operating margin of 12.6%. Net income for the quarter amounted to $284.5 million with diluted EPS of $0.59, both reflecting minor fluctuations from previous quarters, indicative of operational pressures yet persisting profitability. The company maintained a free cash flow conversion rate of 91%, with a free cash flow of $403.2 million, solidifying a healthy cash generation capability.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
3.20B |
-0.41% |
14.32% |
| Gross Profit |
846.70M |
0.01% |
14.53% |
| Operating Income |
402.60M |
-10.23% |
0.25% |
| Net Income |
284.50M |
-0.59% |
-39.05% |
| EPS |
0.60 |
0.00% |
-38.14% |
Key Financial Ratios
operatingProfitMargin
12.6%
operatingCashFlowPerShare
$1.02
freeCashFlowPerShare
$0.84
Management Commentary
Market Strategy and Growth:
Sean Connolly, CEO, emphasized, "Our second quarter results reflect the fact that we continue to win with consumers despite ongoing economic pressures. We saw a return to growth in Q2 as we drove volume improvement, an organic net sales increase, and market share gains."
Inflation Challenges: Connolly also noted, "While we expect our top-line momentum to continue in the second half, our profitability will be pressured by higher inflation and unfavorable foreign exchange rates."
This duality captures the essence of Conagra's current landscape - resilient growth amidst ongoing economic turbulence...
"Our investments have driven a strong response. In Q2 of last fiscal year, I stated our commitment to invest more to put the inflation-driven volume declines in the rearview mirror, with the goal of returning our portfolio to growth."
â Sean Connolly, CEO
"We will implement limited new inflation-justified pricing actions in a couple of areas, which we expect will help offset some of the rising cocoa and sugar prices."
â Josh Nelson, CFO
Forward Guidance
Looking ahead, Conagra management has updated its financial outlook due to anticipated inflationary pressures, projecting an adjusted operating margin of approximately 14.8% for fiscal 2025, with organic net sales expected to be near the midpoint of a range projecting a decline of 1.5% to flat growth. Management remains committed to brand-building investments and anticipates some relief in inflation coming in fiscal 2026. Investors should closely monitor factors such as inflation trends, consumer demand shifts, and foreign exchange rates, which will be pivotal in shaping revenues and profit margins in the upcoming quarters.