Conagra, the maker of Reddi-Wip whipped cream and Chef Boyardee pasta, reported better-than-expected second-quarter revenue and profit on Thursday, as consumers stocked up on food items because of hurricanes.
Conagra's shares were up 2.2 percent in premarket trading, even as the company warned that higher-than-anticipated inflation, hurricane-related costs, and increased investments to expand distribution were pressuring near-term margins.
The company has been revamping its business that has struggled with customers moving away from packaged foods.
It has also been refreshing brands such as Banquet's frozen meals and has been on an acquisition spree to meet customers' preference for more protein-rich products with fewer artificial ingredients.
Conagra said its recent acquisitions such as Duke's meat snacks and Angie's BOOMCHICKAPOP popcorn contributed to higher sales in the grocery and snacks business, its biggest business by revenue, in the second quarter.
The company also said it would buy Sandwich Bros of Wisconsin, which makes frozen breakfast and sandwiches from antibiotic-free chicken and Angus beef, for an undisclosed amount.
The move comes days after Campbell Soup Co and candymaker Hershey Co unveiled deals totaling nearly $6 billion to buy makers of healthy packaged snacks.
Conagra said it now expected organic sales and adjusted profit for the year ending May 2018 at the top end of their respective ranges. It had previously forecast sales to fall 2 percent or remain flat and adjusted earnings of $1.84 to $1.89 per share.
Net income almost doubled to $223.5 million, or 54 cents per share, in the second quarter ended Nov. 26 from $122.1 million, or 28 cents per share, a year earlier.
Selling and general expenses fell 26.5 percent. The company's year-earlier quarter included a $43.9 million pre-tax charge related to goodwill impairment in its Mexican business.
Excluding items, the company earned 55 cents per share, beating the average analyst estimate of 52 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 4 percent to $2.17 billion, coming in above analysts' average estimate of $2.07 billion.