USA – American consumer packaged goods company Conagra Brands has managed to deliver on its third quarter (Q3) earnings per share (EPS) guidance thanks to a strong performance from Ardent Mills.
The company said in a Form 10-Q filed with the Securities and Exchange Commission that Ardent Mills in Q3 of fiscal 2022 built on the positive momentum generated earlier in the year.
“Ardent Mills earnings for the third quarter and first three quarters of fiscal 2022 reflected favorable market conditions, including the joint venture’s effective management through the recent volatility in the wheat markets,” Conagra said in the filing.
In a conference call on April 7 about Conagra Brands’ financial results, Sean M. Connolly, president and chief executive officer, said the strong Ardent Mills performance was pivotal in allowing Conagra to reach its third quarter earnings per share (EPS) guidance despite severe inflationary headwinds.
“Ultimately, we landed Q3 EPS a bit differently than we previously anticipated, but we did get there,” he said.
“Our adjusted Q3 EPS actualized in line with our expectations, above forecasted performance, and our Ardent Mills joint venture offset incremental Q3 inflation headwinds.”
Conagra equity method earnings in the quarter ended Feb. 27, 2022, were US$48.1 million, up 124% from US$21.5 million in the third quarter of fiscal 2021.
In the first three quarters of fiscal 2022, Conagra, which owns 44% of the Ardent Mills joint venture with Cargill and CHS, Inc., had equity investment earnings of $97.8 million, up 92% from the $51 million in the same period of fiscal 2021.
The improvement in Ardent Mills results will drop 3¢ per share on the common stock more to Conagra’s bottom line in fiscal 2022 than a year earlier, said David S. Marberger, executive vice president and chief financial officer.
The company is projecting earnings per share for the year of $2.35 on an adjusted and diluted basis.
CHS earnings boosted by strong demand, market volatility
Meanwhile, CHS’s performance in the second quarter received a boost from strong demand for grain and oilseeds, coupled with global market volatility.
The company’s net income for the second quarter ended Feb. 28 rose to US$219 million while net revenue hit US$10.3 billion for the quarter.
For the first six months of fiscal year 2022, the company reported net income of US$671 million and revenues of US$21.2 billion, which compared with a net income of $31.4 million and revenues of $17 billion in the same time period a year ago.
“The US agricultural industry continues to experience strong demand for grain and oilseed commodities,” said Jay Debertin, president and chief executive officer of CHS.
Debertin noted that this strong demand combined with global market volatility contributed to higher earnings in the quarter.
The CHS Chief however noted that the Russian invasion of Ukraine in February has caused significant uncertainty and instability in global commodities markets, including agricultural commodities and crude oil.
Despite these factors and inflationary pressures, Debertin expressed confidence that CHS remains well positioned to continue to maximize value for our local cooperative and farmer-owners through our integrated global supply chain network.
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