Campbell Soup forecast annual profit largely above Wall Street estimates, banking on higher prices to help offset softer demand for its soups and packaged meals as inflation-weary consumers switch to cheaper options.
Large packaged food companies have passed on higher input costs to customers through multiple rounds of price increases over the past several months, a move that has helped bolster their revenues despite a decline in sales volumes.
Campbell's snack brands, such as Cape Cod potato chips and Goldfish crackers, have also continued to attract customers despite getting costlier, offsetting weaker sales at its meals and beverages division that makes soups and sauces.
Organic sales at Campbell's snacks segment rose 9% in the fourth quarter ended July 30 from a year earlier, while its meals and beverages division posted a modest 1% increase. Volumes across both businesses fell 5% in the quarter.
Campbell's gross profit margin grew to 31.7% from 28.7%, helped by easing costs of commodities such as wheat and corn.
The company said it expects full-year adjusted earnings per share between $3.09 and $3.15, higher than analysts' average estimate of $3.10 at mid-point, according to Refinitiv IBES data.
Shares of the company, which recently struck a $2.7 billion deal to buy sauce brand Rao's owner Sovos Brands, rose about 1% in premarket trading.
It projected a 0.5% decrease to a 1.5% rise in net sales in fiscal 2024, compared with analysts' average estimate of a 0.8% gain to $9.43 billion, according to Refinitiv IBES data.
Net sales at Campbell rose to $2.07 billion in the fourth quarter from $1.99 billion a year earlier, compared with analysts' average estimate of $2.06 billion.
Mark Clouse, Campbell’s president and CEO, stated, “Looking ahead, we see fiscal 2024 as another year of sustained growth and continued progress against our strategic plan.”
Article by Reuters, additional reporting by ESM