Conagra maintains annual forecasts on muted demand, incurs $968 mln impairment charge in Q2

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Conagra swings to quarterly loss due to impairment charge following stock price decline

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Reports Q2 sales in line with expectations, adjusted profit narrowly beat estimates

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Company continues to see 3% tariff hit on annual costs

By Neil J Kanatt

Dec 19 (Reuters) - ?Conagra Brands on Friday kept its annual sales and profit targets intact after a muted second-quarter as ?the Slim Jim meat snacks maker tackles uneven demand for its pantry staples ?due to pressured consumer spending and stiff competition.

The Hunt's ?ketchup maker also ?swung to a quarterly loss as it incurred a $968 million non-cash impairment charge following a sustained decline in ?its share price. Conagra has lost nearly ?40% of its market value in the last two years as it battled supply chain issues, higher ingredient costs, and lackluster ?demand, with budget-conscious shoppers seeking cheaper alternatives.

Consumers' ?shifting preference ?for healthier options amid the Trump administration's "Make America Healthy Again" movement, and increased adoption of GLP-1 or weight-loss drugs pose additional risks to packaged ?food demand. Peers General Mills (GIS) and Campbell's have also maintained their annual forecasts recently amid the economic uncertainty. Conagra's shares appear inexpensive as sentiment across the sector remains muted, RBC Capital Markets analyst Nik Modi said.

"We believe shares will be tied to evidence of a sustained volume recovery." Quarterly volumes fell 3%, compared with ?a ?0.4% rise a year ago. Net sales fell 6.8% to $2.98 billion, in line with expectations.

Conagra reported a net loss of $663.6 million for the ?second quarter, compared with a profit of $284.5 million a year ago. On an adjusted basis, the company posted earnings per share of 45 cents, beating estimates by 1 cent. The company on Friday also said it continues to expect annual net sales between a 1% decline and a 1% rise, and sees annual adjusted profit per share between $1.70 ?and $1.85. Conagra reiterated that it expects a 3% annual hit on cost of goods sold from tariffs, particularly on aluminum used for canned foods. The company plans to mitigate it through sourcing alternatives and ?pricing actions.

(Reporting by Neil J Kanatt in Bengaluru; Editing by Leroy Leo)