ConAgra products in grocery basket
Conagra posted lower volumes in the quarter as it works to reduce promotional activity.

CHICAGO — The reinvention continues for the freshly renamed Conagra Brands, Inc., which posted declining sales and profit in the recent quarter driven by reduced discounting that led to lower volumes. The Chicago-based company, which in November completed the spin-off of its Lamb Weston business, is pursuing “value over volume,” said Sean Connolly, president and chief executive officer.

“We are successfully reshaping our portfolio, capabilities and culture,” Mr. Connolly said. “Our increased focus and discipline on driving value over volume are enabling us to expand our margins as we build a higher-quality revenue base, improve efficiency, and deliver stronger, more consistent performance.”

Sean Connolly, ConAgra
Sean Connolly, president and c.e.o. of Conagra Brands

Net income attributable to Conagra Brands in the second quarter ended Nov. 27 was $122.1 million, equal to 28c per share on the common stock, down 21% from $154.9 million, or 36c per share, in the prior-year period. Net sales declined 12% to $2,088.4 million from $2,358.8 million. The decrease in sales was driven by volume declines, divestitures and foreign currency translation.

“We expect to improve sales growth trends in the second half of the fiscal year as we begin to lap the pricing and trade actions we undertook last year,” Mr. Connolly said. “Accordingly, we are reaffirming the fiscal 2017 guidance we provided at our investor day on Oct. 18, 2016.”

For the full year, the company continues to expect net sales to decrease between 4% and 5% and adjusted earnings per share of between $1.65 and $1.70.

Operating profit for the Grocery & Snacks segment, which includes such brands as Slim Jim meat sticks, Orville Redenbacher’s popcorn, Hunt’s ketchup and Chef Boyardee pasta, increased 19% to $220.3 million in the quarter, reflecting strong margin expansion in the quarter driven by continued discipline on pricing and trade promotion, supply chain productivity and favorable input costs. Sales, meanwhile, declined 6% to $853.9 million, with volume decreasing 7%.

Banquet frozen meals, ConAgra
The company is overhauling its Banquet business.

Operating profit for the Refrigerated & Frozen segment, which includes such brands as Marie Callender’s, Banquet and Healthy Choice frozen meals, fell 5% to $117.9 million, as sales declined almost 11% to $740 million, reflecting the impact of reduced promotional activity and the discontinuing of less profitable products.

The International segment posted an operating loss of $26.7 million, which compared with an operating profit of $20.1 million in the year-ago period, reflecting goodwill impairment charges. Adjusted segment operating profit declined 17% to $18 million. Net sales for the segment declined 5% to $211.4 million, due to the negative impact of foreign currency translation and a decrease in volume.

Foodservice segment operating profit increased 56% to $31.9 million, as the segment wrote down inventory in the prior year while exiting a non-core business. Conagra Brands estimated the impact from the exited business added 52 percentage points to operating profit growth for the segment. Net sales, meanwhile, declined 0.7% to $283.1 million.

Net income attributable to Conagra Brands in the six months ended Nov. 27 was $308.3 million, or 48c per share, which compared with a loss of $999.2 million. Net sales fell nearly 10% to $3,984 million from $4,411.8 million.

Conagra Brands’ shares were up more than 3% in mid-morning trading on the New York Stock Exchange following the earnings release on Dec. 22.