Inflation played a major role in a drop in profit for Conagra Brands in the second quarter, and it’s going to be as bad or worse in 2022, company executives said.
Conagra posted a drop of 15% in gross profit, to $775 million, for the second fiscal quarter of 2022 compared with the same quarter last year. Adjusted gross profit was down 14%. The decline occurred even though organic net sales were up 2.6%.
A company statement attributed the situation mostly to inflation, noting that Conagra’s cost of goods sold increased 16% in the quarter. Inflation also played a role in the sales bump: The 2.6% increase came even though unit volume was down, with higher prices accounting for the difference.
“Looking ahead, we expect to continue experiencing cost pressures above original expectations in the second half of fiscal 2022,” CEO Sean Connolly said in the statement. “However, we believe the sustained elevated consumer demand coupled with the mitigating actions we have successfully executed, and will continue executing, put us on track to overcome these near-term challenges, improve margins in the back half of the fiscal year, and deliver on our profit plan."
