Campbell Soup Co has slashed its forecast for full-year earnings on higher costs related to raw materials and transportation.
The company's shares fell about 6% in trading before the bell after it also recorded a near 5% fall in quarterly profit.
The canned soup maker expects 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.
The outlook also includes the impact of the sale of Campbell's Plum baby food and snacks business, the company said.
Third Quarter Performance
For the third quarter, net earnings attributable to the company fell to $160 million (€131.5 million), or 52 cents per share, in the three months ended 2 May, from $168 million, or 55 cents per share, a year earlier.
Net sales decreased 11% to $1.98 billion (€1.63 billion), while organic net sales dropped 12% due to unprecedented food purchases for at-home consumption at the onset of the COVID-19 pandemic in the same quarter last year.
EBIT for the period amounted to $272 million, comparable to the first quarter of 2020. However, adjusted EBIT decreased 27% to $283 million due to sales volume declines and lower adjusted gross margin performance, partially offset by lower marketing and selling expenses.
Commenting on the company's performance, Campbell's president and CEO, Mark Clouse, said, "While we recognized the third quarter would be a challenging net sales comparison to the demand surge at the onset of the COVID-19 pandemic a year ago, we faced additional headwinds.
"Our results were impacted by a rising inflationary environment, short-term increases in supply chain costs, and some executional pressures as we continued to advance our transformation agenda, primarily in our Snacks division."
Clouse added, "We are confident that these are all addressable, and we are taking appropriate actions, including putting pricing in place for the next fiscal year.
"Our confidence is further strengthened by the underlying health of our brands. Nearly three-quarters of our portfolio gained or held share in the quarter, with most of our core categories having grown at higher rates than pre-pandemic levels."
In the nine months ended 2 May 2021, the company generated comparable net sales of $6.60 billion. Organic sales increased by 1%, driven by lower promotional spending across its meals and beverage and snacks divisions.
The meals and beverages unit saw sales up 1%, driven by growth in US soup and V8 beverages, partially offset by declines in food service.
Organic net sales in the snacks division were flat as declines in Lance sandwich crackers and partner brands within the Snyder's-Lance portfolio were offset by gains in salty snacks and fresh bakery products.