CHICAGO — Conagra Brands Inc. shaved its fiscal 2025 guidance in reporting weak third quarter results the morning after President Donald Trump unveiled sweeping tariffs in what he called “liberation day” for the United States in global trade.

“Our fiscal 2025 guidance remains unchanged as we continue to closely monitor the dynamic external environment, including tariffs and trade impacts, regulatory and policy changes, inflation and shifts in consumer sentiment,” Sean Connolly, Conagra president and chief executive officer, said in a webcast on the quarterly performance. “Amid this evolving landscape, we remain focused on strong execution and operating with agility to drive sustainable success.”

Expected higher commodity costs had led Conagra to lower its full-year forecast when announcing second-quarter results in late December. The Chicago-based food company now projects adjusted earnings per share of $2.35 for fiscal 2025, with organic net sales shrinking 2%. That compares with its previous guidance of $2.45 to $2.50 in adjusted EPS and the midpoint of down 1.5% to flat in organic net sales.

Connolly cited “shifts in consumer confidence and spending” as among the factors that Conagra is tracking in the volatile operating environment, adding that further cost-efficiency and optimization efforts also are on the table.

“To help navigate these issues, management is remaining agile and proactive as we continue to mine our productivity programs to ensure we are capturing all efficiency opportunities, including optimizing our manufacturing footprint,” he said. “We also continue to look at portfolio reshaping for opportunities to drive long-term growth. And of course, we remain focused on developing products that offer consumers great value, taste and function.”

On April 2, the Trump administration announced reciprocal tariffs of 10% on all countries, effective April 5. Plans call for higher tariffs to take effect April 9 on nations with which the United States has the largest trade deficits. The administration already has announced tariffs on Canada, Mexico and China as well as on steel and aluminum imports.

Depending on the tariff impact, price changes may be upcoming, according to David Marberger, chief financial officer of Conagra.

“We do expect to be impacted by the previously announced US tariffs on tin mill steel and aluminum and, to a much more modest extent, Chinese imports,” Marberger said. “We have started to see charges come through, but we expect only a limited impact on our fourth-quarter expense from these tariffs as we work through inventory on hand. We will look to offset any cost increases through a combination of alternative sourcing methods, cost savings initiatives and targeted price adjustments.

“Our guidance does not include impacts from tariffs other than those just mentioned. We expect to provide additional information on this topic when we provide guidance for our fiscal ’26 in July.”

In a later conference call with analysts, Connolly said the tariff situation is clouding Conagra’s outlook over the next year.

 “We’ve got to see where the dust settles on these external factors, because that is the biggest variable we are dealing with right now,” he said. “We've already been dealing with inflation that really has not abated. We’ve had record inflation over the last few years, and we’ve been in higher inflation this year than we expected when we went into the year. And now we’re looking at potential factors that could exacerbate that and what are the follow-on actions that we’re going to have to take. It’s too early to tell, obviously, how the dust is going to settle there.”

Declines at bottom and top lines

For the third quarter ended Feb. 23, Conagra’s net income fell 53% to $145.1 million, equal to 30¢ per diluted share on the common stock, from $308.6 million, or 64¢ per diluted share, a year earlier. The drop primarily reflected the impact of net expenses related to legal matters and the impairment of business held for sale, Conagra said. Adjusted net earnings decreased 26.3% $242.1 million, or 51¢ per diluted share, from $328.9 million, or 69¢ per diluted share, a year ago. Wall Street’s consensus forecast was for adjusted EPS of 53¢.

At the top line, net sales declined 6.3% to $2.84 billion from $3.03 billion, in part due to a combined 1.1% negative impact from foreign exchange and mergers and acquisitions, Conagra reported. Organic net sales decreased 5.2% to $2.85 billion from $3.01 billion in the prior year period. The company said the falloff reflected decreases of 3.1% in volume and 2.1% in price/mix, the latter stemming from strategic investments in the US retail business.

Conagra faced supply challenges in frozen vegetables and frozen meals with chicken during the quarter.

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Connolly described Conagra’s third-quarter results as “consistent with the expectations we articulated in February” at the Consumer Analyst Group of New York (CAGNY) conference, with “strong consumption trends and share performance reflecting the continued strength and resilience of our brands.”

“Shipments lagged behind consumption during the third quarter, in part due to the discrete supply constraints we announced in mid-February,” he explained. “We experienced supply challenges in two product platforms – frozen meals containing chicken and frozen vegetables – which prevented us from fully servicing demand during the quarter. Through continued investments in infrastructure and strategic partnerships, we’re making solid progress to restore inventory and improve customer service levels across these key product platforms.”

In the Grocery & Snacks business unit, third-quarter net sales fell 3.2% year over year to $1.25 billion. Organic net sales were down 3.9% on declines of 2.6% in price/mix and 1.3% in volume. Conagra said it gained unit share in snacking and staples, including microwave popcorn, hot cocoa, shelf-stable dinners, chili, canned tomatoes and seeds.

“Our snacking portfolio continues to perform well, reporting strong volume sales growth of 3.8% at the end of the fiscal third quarter,” Connolly said. “In addition to Swiss Miss, we continue to benefit from our advantaged position spanning permissible snacking subspaces like seeds and popcorn, where our brands saw increases in volume sales in the third quarter.

“We continued to see encouraging trends delivering sequential volume sales improvement in staples during the third quarter,” he added. “Q3 volume sales were driven by a strong holiday season for Reddi-Wip as well as our table spreads and tomato platforms.”

Net sales in the Refrigerated & Frozen business dropped 7.2% to $1.12 billion on a reported and an organic basis, as volume decreased 3% and price/mix was down 4.2%. Though supply constraints squeezed volume in frozen vegetables and frozen meals with chicken, Conagra said it grew unit share in categories such as frozen desserts, frozen single-serve meals, frozen breakfast, refrigerated whipped toppings and hot dogs.

“Despite the previously mentioned supply chain challenges, Conagra’s frozen consumption remains strong,” Connolly said. “Our Q3 retail volume sales have grown for three consecutive quarters. Importantly, the frozen department continues to outpace the total edible category, and Conagra is driving category growth.”

Foodservice net sales declined 6.1% to $255.5 million and were down 6.3% organically on a 10% drop in volume and a 3.7% increase in price/mix. International segment net sales sank 17.6% to $223.9 million, negatively impacted by foreign exchange and divested businesses, Conagra said. Organically, net sales dipped 1.2% on a 5.6% volume decline and a 4.4% uptick in price mix.