Slim Jim snack maker Conagra Brands' CEO said in April it may have to hike prices to offset tariffs costs on ingredients like coco and olive oil used for its canned food products.Andrew Kelly/Reuters
Conagra Brands CAG-N forecast annual profit below Wall Street expectations on Thursday as it grapples with higher tariff-related costs for products including its Hunt’s ketchup due to levies on imports from China and on metals.
The outlook shows how President Donald Trump’s on-and-off trade policies with changing sector and country-specific tariffs are being felt by U.S. companies.
Conagra flagged an overall rise in the cost of goods sold at about seven per cent for the year, including a three per cent hit from the tariffs.
Its shares were down about seven per cent after the company also missed analysts’ estimates for quarterly sales and profit.
“Consumer sentiment remains under pressure. The cumulative impact of inflation and economic uncertainty has led to value-seeking behaviors becoming even more pronounced,” CEO Sean Connolly said in prepared remarks.
In April, Connolly told Reuters the company may have to hike prices to offset tariffs costs on ingredients like cocoa, olive oil, palm oil and steel used for its canned food products.
The company said on Thursday it plans to mitigate the tariff hit through “accelerated cost savings plan, sourcing alternatives and targeted pricing actions,” also adding to costs.
The Slim Jim snack maker said it expects its annual adjusted profit per share to be between $1.70 and $1.85, compared with analysts’ average estimate of $2.19, according to data compiled by LSEG.
“While the severe cut (in profit forecast) is needed for the environment, it is too early to tell if it is enough,” said Nik Modi, analyst at RBC Capital Markets.
The forecast accounts for a 50 per cent tariff rate on imported tin plate steel and aluminum, a 30 per cent rate on limited imports from China and a 10 per cent reciprocal rate on imports from certain other countries.
Conagra said its canned food products brings it the most tariff exposure as materials including tin plate steel has limited domestic supply.
Net sales fell 4.3 per cent to $2.78 billion in the fourth quarter, compared with estimate of $2.83 billion, while adjusted earnings per share of 56 cents narrowly missed expectations of 58 cents.