By Juveria Tabassum
(Reuters) -Conagra Brands beat Wall Street estimates for third-quarter revenue and profit on Thursday, buoyed by a rebound in demand for its pantry staples and frozen food items from more consumers cooking meals at home in the face of sticky inflation.
Shares of the Slim Jim beef jerky maker rose 5% after it also raised annual adjusted operating margin forecast and said its cost-saving attempts were paying off.
Conagra has veered towards lowering prices in some categories such as refrigerated and frozen foods segment, and increasing promotions to appeal to budget-conscious consumers.
Packaged food companies have been looking to stem the fall in volumes, which have been battered in recent times due to consistent price hikes.
Conagra's total volumes decreased 1.8% in the quarter, less than the 2.9% drop in the preceding three-month period.
While volumes lagged in the refrigerated category, CEO Sean Connolly told Reuters that Conagra was seeing "a very meaningful improvement in trend" for its snacks and frozen items.
Volumes in its grocery and snacks segment fell 0.8%, compared with a 3.7% decrease in the second quarter.
Analysts at Jefferies termed the Birds Eye parent's results a "positive print," despite an increase in spending on advertising and promotions.
Easing supply chain snags have helped counter the impact from waning price hike benefits. Conagra raised its annual operating margin forecast to 15.8% from 15.6%.
"The efficiency of our operations in Q3 resulted in cost savings that enabled us to fund investment while maintaining gross margin," CFO Dave Marberger said in a statement.
Margins in the quarter also benefited from higher prices of vegetables such as tomatoes, the company said on a post-earnings call.
Conagra maintained its annual forecasts for organic net sales and profit.
Its third-quarter net sales of $3.03 billion beat LSEG estimates of $3.01 billion, while adjusted profit of 69 cents per share also topped the estimated 65 cents.