Earnings Flash: Inflation Both Helped And Hurt Campbell Soup

Earnings Flash: Inflation Both Helped And Hurt Campbell Soup
Reuters x Finimize

6 months ago1 min

Campbell Soup beat Wall Street estimates for third-quarter profit on Wednesday as the maker of Pepperidge Farm cookies benefited from several quarters worth of price hikes.

Packaged food companies such as Campbell, Kraft Heinz, and Kellogg have been raising the prices of their meals, beverages and snacks to offset higher input costs stemming from supply chain snags and the Russia-Ukraine war.

Shares of Campbell fell about 3% in premarket trading, after the company also maintained its annual sales and profit forecasts - a decision that some analysts attributed to a "prudent level of conservatism".

Investors are likely disappointed with the company keeping its forecast unchanged as they were anticipating a raise, said CFRA Research analyst Arun Sundaram.

The company expects annual net sales to grow between 8.5% and 10%, and forecast adjusted profit of $2.95 to $3.00 per share.

Campbell's average selling price rose 12% in the quarter, but a 7% decline in total volumes signaled that Americans pressured by rising food prices were moving away to private-label products that are more affordable.

"While we do foresee an improvement in volumes in the future, we are unlikely to see meaningful growth until the pressure of price increases subsides," Sundaram said.

CEO Mark Clouse said in a post-earnings call that volumes were also impacted by retailers cutting back on rebuilding inventory compared to last year, when most of them restocked heavily to battle a shortage in products due to pandemic-driven supply chain disruptions.

Campbell's third-quarter gross profit margin was 30%, compared with 31.2% last year, squeezed by higher costs of commodities, freight and marketing.

Excluding one-time items, the Goldfish crackers maker earned 68 cents per share, beating analysts' estimates of 64 cents, according to Refinitiv IBES data.

Net sales rose 5% to $2.23 billion, in line with expectations.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Learn More

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG