Business

Campbell Soup lowers annual profit forecast as costs rise

Campbell Soup on Wednesday slashed its forecast for annual earnings after the company’s quarterly results fell short of estimates, hurt by higher costs related to raw materials and transportation.

The canned soupmaker’s shares fell about 6 percent to $46.30.

Campbell, known for Swanson broth, Prego pasta sauces and Pepperidge Farm cookies, expects higher costs to hurt margins even as it plans price hikes for later this year.

Shipping logjams globally and surging demand on the back of a resurgent US economy have led food manufacturers to sacrifice their profit margin as costs rose for items across the board.

“We expected this to be a challenging quarter … but it was made even tougher by several additional factors,” Campbell Chief Executive Officer Mark Clouse said, adding that he expects price increases to offset some margin pressures.

Campbell also struggled with production and supply disruptions due to the winter storms in Texas earlier this year.

Price hikes are a “cold comfort” and expect investors to view food companies with a skeptical eye in the next few quarters, JPMorgan analyst Ken Goldman said.

Campbell forecast fiscal 2021 adjusted earnings between $2.90 and $2.93 per share, compared with its prior forecast of $3.03 to $3.11 per share. It expects sales to fall at least 3 percent, compared with the minimum 2.5 percent fall projected earlier.

Pepperidge Farm Milano cookies are seen on a supermarket shelf.
Campbell Soup also makes Pepperidge Farms cookies and other food brands, including Prego and Swanson. Corbis via Getty Images

The company, which saw an uptick in demand during peak pandemic from consumers staying at home, said sales of snacks fell 8 percent in the third quarter, while sales of its soups and pasta sauces fell 14 percent.

On an adjusted basis, Campbell earned 57 cents per share, missing estimates of 66 cents, according to IBES data from Refinitiv. Net sales fell about 11 percent to $1.98 billion, compared with estimates of $2 billion.