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UPDATE 2-Campbell Soup forecast disappoints as costs bite

reuters.com · 09/01/2021 07:23
UPDATE 2-Campbell Soup forecast disappoints as costs bite

Adds details on quarterly results and buyback plan, shares, background

- Campbell Soup Co CPB forecast fiscal 2022 profit and sales below market estimates on Wednesday, hit by a slowdown in demand for packaged foods and higher raw material and transportation expenses.

Packaged foods makers have been wrestling with higher costs of ingredients such as wheat, edible oils and corn, while also spending heavily on freight to ease the strain on their supply chains due to the pandemic.

To protect profit margins, Unilever Plc UL, General Mills Inc GIS and Conagra Brands CAG have raised prices, with many expected to announce additional hikes in the next few months. nL4N2OP2MA

Campbell has "strong plans to manage inflation," Chief Executive Officer Mark Clouse said in a statement, acknowledging the company has "a very challenging environment" heading into fiscal 2022.

Campbell, the maker of Prego pasta sauces and Cape Cod potato chips, expects adjusted earnings between $2.75 and $2.85 per share for fiscal 2022, compared with market estimates of $2.87, according to Refinitiv IBES.

The packaged food maker also expects net sales in a range of flat to a decline of 2% in fiscal 2022, compared with analysts' estimate of a nearly 1% fall. Net sales declined 2% in fiscal 2021.

Net sales fell to $1.87 billion in the fourth quarter ending Aug. 1 from $2.11 billion a year earlier as people stockpiled soups and snacks during coronavirus lockdowns last year. It was still higher than analysts' expectation of $1.81 billion.

Excluding items, Campbell earned 55 cents per share, beating expectations of 48 cents.

Shares in Campbell rose 1% as it announced a $500 million share repurchase program that adds to the $250 million plan it laid out last quarter.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Krishna Chandra Eluri)