Conagra cuts dividend 50% after $2 billion charge, weak profit outlook

Conagra Brands reported a $1.62 billion quarterly loss and halved its dividend, as the packaged-food maker grapples with inflation-weary consumers shifting to cheaper private-label alternatives.

"The portfolio has been too large, too complex for too long," Chief Executive Officer John Brase, who took over in June, said in an interview. Brase said he would review non-core assets for potential divestiture while focusing on frozen foods and snacking as growth drivers.

The Hunt's ketchup and Swiss Miss hot cocoa maker recorded a $2 billion impairment charge tied to a sustained decline in its share price and market capitalization. Fourth-quarter net sales came in at $2.88 billion, narrowly missing estimates. The company slashed its annual dividend to $0.70 per share from $1.40, freeing up more than $330 million in cash, according to RBC Capital Markets.

The results show the pressure on legacy packaged-food companies as consumers trade down to store brands and GLP-1 weight-loss drugs shift eating habits. Conagra forecast fiscal 2027 adjusted profit of $1.40 to $1.50 per share, below the $1.59 average analyst estimate compiled by LSEG. It expects organic net sales to decline 1 percent to 3 percent this fiscal year, compared with a 0.4 percent drop in fiscal 2026.

Brase said he would increase annual advertising spending by about 14 percent, acknowledging the company had underinvested in its brands. He also plans mid-single-digit price increases this fiscal year, calling them "inflation-justified pricing actions." The company aims to reduce its debt-to-core-profit ratio to about 3 times from 3.83 times as of May 31 before pursuing any meaningful acquisitions.

Shares rose about 1 percent on the day but remain down roughly 18 percent year to date and about 65 percent over the past three years. "The company will need to put points on the board with regard to demonstrating it can recover margins while also investing to stabilize organic sales before the market will give the company much credit for these actions," BNP Paribas Equity Research senior analyst Max Gumport wrote in a note.

The dividend cut and impairment charge mean Conagra's turnaround will take time, with the new management team prioritizing debt reduction and brand investment over shareholder returns. Investors will watch the next quarterly report for evidence that Brase's strategy of higher advertising spend and selective price increases can stabilize market share.

This article is for informational purposes only and does not constitute investment advice.