By Neil J Kanatt and Alexander Marrow
July 15 (Reuters) – Hunt’s ketchup maker Conagra Brands said on Wednesday it would review its non-core assets, as the packaged food maker halved its annual dividend and issued weak profit guidance amid pressure from higher costs and cautious consumer spending.
Shares of the company were down 2% in early trading, paring some premarket losses, after it swung to a quarterly loss due to a $2 billion impairment charge, largely triggered by a sustained decline in its share price and market capitalization.
The Swiss Miss hot cocoa maker’s shares have fallen about 18% so far this year and are down around 65% over the last three years.
Packaged food makers are under pressure as inflation-weary consumers switch to cheaper private labels and healthier alternatives, triggered partly by the rapid adoption of GLP-1 weight-loss drugs, while higher commodity and packaging costs continue to weigh, prompting companies to look for new ways to revive growth.
Conagra CEO John Brase, who took over from Sean Connolly in June, said he was resetting the dividend to an annualized rate of $0.70 from $1.40 as the company redirects funds to rejuvenating the business.
RBC Capital Markets, which had estimated that a 50% dividend cut would free up over $330 million in cash, said that it is a step in the right direction but there is still more work to do for Conagra to regain confidence.
As part of his efforts to turn the company around, Brase also said Conagra would increase annual advertising spending by about 14%.
“We simply haven’t invested enough behind our brands,” Brase said.
The Hunt’s ketchup maker said it expects fiscal 2027 adjusted profit of $1.40 to $1.50 per share. Analysts on average were estimating earnings of $1.59 per share, according to data compiled by LSEG.
Conagra reported a net loss of $1.62 billion for the fourth quarter ended May 31, compared with a $256 million profit a year ago. On an adjusted basis, it posted quarterly earnings of 47 cents per share, marginally above expectations of 46 cents.
The company expects annual organic net sales to decline between 1% and 3%, from a 0.4% decline in fiscal 2026. It posted fourth-quarter net sales of $2.88 billion, narrowly missing estimates.
(Reporting by Neil J Kanatt in Bengaluru and Alexander Marrow in London; Editing by Joyjeet Das and Diti Pujara)
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