By Ananya Mariam Rajesh
(Reuters) -Campbell Soup maintained its annual forecasts despite beating estimates for quarterly profit due to higher prices, sending shares of the Pepperidge Farm cookie maker down about 7% in early trade on Wednesday.
Packaged food companies such as Campbell, Kraft Heinz and Kellogg Co have for several quarters raised the prices of their meals, beverages and snacks to offset higher input costs stemming from supply chain snags and the Russia-Ukraine war.
Investors are likely disappointed with the company keeping its forecast unchanged as they were anticipating a raise, said CFRA Research analyst Arun Sundaram, but added that the decision reflected a “prudent level of conservatism”.
Campbell expects annual net sales to grow between 8.5% and 10%, below analysts’ estimates for a rise of 9.45%, according to Refinitiv IBES data. It forecast adjusted profit of $2.95 to $3.00 per share, compared with estimates of $3.01.
Its 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 estimates of 64 cents.
Net sales rose 5% to $2.23 billion, in line with expectations.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Devika Syamnath)
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