Campbell's cuts FY guidance on weaker snacks demand

(Sharecast News) - Shares in American foods group Campbell's Co slipped on Wednesday after a weaker outlook for its snacks business prompted a downgrade to full-year guidance. The company, known for its eponymous soup brand, said net sales were 5% down year-on-year in the three months to 1 February, its fiscal second quarter, to $2.6bn.

Chief executive Mick Beekhuizen said results "fell short of our expectations due to weaker-than-expected performance in Snacks and storm-related shipment disruptions".

Adjusted gross profit fell to $710m from $815m the year before as the adjusted gross profit margin dropped 270 basis points to 27.7% due to cost inflation, supply chain costs, unfavourable volume/mix effects the impact of trade tariffs.

Adjusted earnings per share slumped 31% to 51 cents, coming in below the 57 cents consensus forecast.

As a result, the company said it was taking a "more cautious view for the balance of the year", with full-year results likely lower than its last guidance given in December.

Organic net sales are now expected to be 1-2% lower than last year, compared with earlier range of -1% to +1%, while adjusted earnings before interest and tax are tipped to fall 17-20%, compared with earlier guidance of a 9-13% decline.

"To stabilise Snacks, we are taking decisive action, focused on sharpening our value, new product innovation and in-market execution. We are also accelerating cost saving initiatives to mitigate cost headwinds and support continued investment in our brands," Beekhuizen said.

The stock was down 3.3% at $23.87 by 1334 GMT in early deals after the opening bell.