July 15 (Reuters) – Conagra Brands cut its annual dividend and forecast annual profit below Wall Street expectations on Wednesday after taking a $2 billion impairment charge, underscoring mounting pressure from higher costs and cautious consumer spending.
Shares of the Slim Jim maker fell about 4% in premarket trading after it swung to a quarterly loss due to a one-time charge, largely triggered by a sustained decline in its share price and market capitalization.
In one of his first major moves as CEO, John Brase, who took over from Sean Connolly in June, said he was resetting Conagra’s dividend to an annualized rate of $0.70 from $1.40 as the company redirects funds to rejuvenating the business.
The dividend reset “proactively realigns our capital allocation, accelerates progress toward our leverage target, supports critical investments, and strengthens our financial flexibility, including the ability to shape the portfolio over time,” Brase said in a statement.
The 50% dividend cut would free up over $330 million in cash for Conagra, RBC Capital Markets estimated in a note ahead of the results.
Higher beef prices, along with tariffs on steel and aluminum used in packaging, remain a margin pressure for Conagra, which increased prices last year to offset higher ingredient costs and tariffs on tin-plate steel used in packaging.
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.
It also forecast an annual organic net sales decline of between 1% and 3%, compared to a 0.4% decline in fiscal 2026, as persistent inflation, especially for gas prices, pressures household budgets, prompting consumers to trade down to cheaper private-label alternatives.
The company posted net sales of $2.88 billion for the quarter ended May 31. Analysts on average expected $2.89 billion, according to data compiled by LSEG.
Conagra reported a quarterly net loss of $1.6 billion, while on an adjusted basis it posted earnings per share of 47 cents, compared with expectations of 46 cents.
Shares of the Swiss Miss hot cocoa fell about 18% so far this year.
(Reporting by Neil J Kanatt in Bengaluru and Alexander Marrow in London; Editing by Joyjeet Das)
