Campbell Soup has raised its forecast for annual net sales growth, banking on a recovery in demand for its ready-to-eat soups and meals and from its acquisition of Rao's sauce maker Sovos Brands.
After several quarters of declines, volumes for the company products showed a sequential improvement this year, helped by Campbell easing back on price hikes as well as a slight let up in the strain on consumers' household budgets as inflationary pressures cool.
Both volumes and price realisation in the third quarter were flat, compared with a 2% drop in volumes and a 1% rise in prices in the preceding quarter.
The company, which sells ready-to-eat meals and snacks, also benefited from consumers, particularly in the lower-income cohort, looking for more affordable meals at home.
Campbell expects annual net sales growth of 3% to 4%, compared with its previous range of a fall of 0.5% to a rise of 1.5%.
Quarterly Highlights
Campbell's third-quarter net sales rose 6% to $2.4 billion (€2.2 billion), helped by the Sovos Brands acquisition, which it completed in March this year.
It reported organic net sales of $2.2 billion (€2.02 billion) for the quarter. Analysts, on average, were expecting net sales of $2.36 billion (€2.2 billion), as per LSEG data.
Excluding items, Campbell Soup posted earnings of 75 cents per share in the quarter, compared with estimates of 70 cents.
The company, however, lowered its annual organic net sales forecast to 'reflect the current pace of consumer recovery.' It now expects organic net sales in the range of flat to down 1%, compared with prior expectations of flat to a 2% rise.
The Goldfish crackers owner expects to deliver an annual adjusted profit between $3.07 and $3.10 per share, compared to a prior range of $3.09 to $3.15 per share.
Shares of the company were up about 1% in premarket trade after it also beat Wall Street expectations for quarterly profit, helped by its cost savings measures.
"A Solid Third Quarter'
Campbell’s president and CEO, Mark Clouse said, “We delivered a solid third quarter with sequential volume improvement, stable organic net sales, double-digit adjusted EBIT and adjusted EPS growth.
“We are excited about the integration of the Sovos Brands business, which already is bringing significant incremental growth to our company as we continue to navigate the pace of consumer recovery.”
News by Reuters, additional reporting by ESM.
