11-07-2025
Conagra Brands Inc (CAG) Q4 2025 Earnings Call Highlights: Navigating Inflation and Driving Growth
Release Date: July 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Conagra Brands Inc (NYSE:CAG) received a strong consumer response to volume-focused investments, particularly in frozen snacks, leading to volume growth.
The company is implementing a robust productivity program, expecting over 5% productivity gains in fiscal '26, which is higher than previous years.
Conagra Brands Inc (NYSE:CAG) is investing in supply chain resiliency, including a new chicken plant, to reduce costs and improve efficiency.
The company is focusing on premiumization and innovation in its frozen food segment, with successful products like Banquet MEGA Chicken Filets.
Conagra Brands Inc (NYSE:CAG) is committed to maintaining an attractive dividend while also planning to pay down $700 million in debt in fiscal '26.
Conagra Brands Inc (NYSE:CAG) is facing persistent inflation, with an additional 11% cost increase expected across fiscal '25 and '26, leading to temporary margin compression.
The company is experiencing double-digit inflation in key material costs, such as animal proteins, impacting overall cost structure.
Conagra Brands Inc (NYSE:CAG) is dealing with supply chain constraints that have affected service levels and volume growth in the past.
The company anticipates a modest volume decline in fiscal '26, with challenges in maintaining volume growth across its portfolio.
Conagra Brands Inc (NYSE:CAG) is facing competitive pressures, particularly in categories with high private label presence, which may impact pricing strategies.
Warning! GuruFocus has detected 5 Warning Signs with CAG.
Q: Sean, should the more aggressive investment approach in Conagra's fiscal '26 guidance suggest that the current industry challenges are more structural? A: Sean Connolly, CEO, explained that the company is focusing on volume growth despite inflationary pressures. He emphasized that the inflation cycle is not transitory, with cumulative delivery costs increasing by over $2 billion. Conagra is investing in volume growth, particularly in frozen snacks, and expects margin expansion in the future through productivity, inflation relief, supply chain investments, and strategic pricing.
Q: Dave, can you unpack the 4% core inflation number for fiscal '26 and the moving parts within it? A: David Marberger, CFO, detailed that 60% of the cost of goods sold are material costs, with animal proteins inflating double digits. Additional inflation is seen in corrugated cocoa and manufacturing infrastructure. Transportation and warehousing costs are also inflating, contributing to the 4% core inflation estimate for fiscal '26.
Q: How is Conagra balancing price and promotion strategies across its major categories? A: Sean Connolly, CEO, stated that Conagra is not searching for answers to drive volume growth, as they have a proven model. The company focuses on modernizing brands, investing in high-quality displays, and leveraging social media for awareness. Conagra is prioritizing volume growth in frozen and snacks while managing pricing in other categories like canned foods.
Q: What gives Conagra confidence in taking pricing actions despite consumer value-seeking behavior? A: Sean Connolly, CEO, explained that Conagra's elasticity is slightly better than competitors, and they are taking inflation-justified pricing in the grocery business. The strategy is to invest in growth areas like frozen and snacks while maximizing cash flow from canned foods to fund these investments.
Q: How does Conagra plan to manage the impact of ongoing inflation and maintain profitability? A: Sean Connolly, CEO, described the mechanical nature of inflation cycles, where initial cost increases are followed by pricing actions to recover profits. Conagra is focusing on maintaining brand equity and consumer connection, with a pathway to recapture margins through productivity, pricing, and process improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
