Campbell Soup Co has forecast annual profit below Wall Street expectations due to persistently high raw material costs and investments into promotions going forward.
Several packaged food companies have been grappling with higher expenses of inputs including olive oil, cocoa, packaging, labour and warehousing, prompting them to undertake several rounds of price increases last year to lift margins.
The company forecast adjusted earnings between $3.12 and $3.22 per share in fiscal 2025, while analysts on average were expecting annual profit of $3.23 per share, according to LSEG data.
In the fourth quarter ended 28 July, its adjusted gross profit margin increased 80 basis points to 31.4%.
Excluding items, Campbell Soup posted earnings per share of 63 cents, compared with estimates of 62 cents.
The prices increases have eaten into demand for certain brands as price-conscious consumers favour cheaper private-label products.
Organic sales at its snacks division declined 3% in the quarter, while its net sales of $2.29 billion (€2.07 billion) missed estimates for a 11.7% rise to $2.31 billion (€2.09 billion).
Outlook
The company expects net sales to rise between 9% and 11% in fiscal 2025, above estimates for a 8.92% jump, betting on steady demand for its soups and ready-to-eat meals.
Shares of the company, known for its Prego pasta sauces and Pepperidge Farm cookies, dropped 1% in premarket trading.
President and CEO, Mark Clouse, stated, “We finished fiscal 2024 with solid fourth-quarter performance including sequential volume improvement and margin expansion versus prior year and delivered significant progress against our longer-term strategic plan despite an evolving consumer landscape. [...]”
“The strength of the Meals & Beverages recovery, including Soup, was a standout in the quarter as was the competitive advantage of our supply chain. The integration of Sovos Brands is progressing ahead of our expectations, marking a transformative shift in our Meals & Beverages growth trajectory.”
