Campbell Soup Co. has booked drop in full-year profits as higher costs and increased spending on promotions hit earnings.
In the 12 months ended 29 July, earnings amounted to US$774m, a 0.2% decline on the prior-year period. Excluding items impacting comparability in both periods, adjusted net earnings declined 7% to $783m.
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EBIT slid 5.5% to $1.21bn as a result of a decline in gross margin, which suffered amid “cost inflation, increased promotional spend and unfavourable mix”, Campbell said.
Sales dropped to $7.70bn from $7.72bn in the prior year. Campbell blamed the revenue decline on the increased promotional expenditure and a volume and mix impact of two percentage points.
However, in the last three months of the year, Campbell reported a 3% increase in sales on an organic basis. President and CEO Denise Morrison said Campbell saw “strong gains” in US soup and simple meals. Reported sales were flat.
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Nevertheless, cost inflation and spending on marketing and promotions hit adjusted EBIT, which fell 10%. Net earnings climbed to $127m from $100 a year earlier.
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By GlobalDataFor the current financial year, Campbell forecast sales growth of 10-12% and earnings of $2.51 to $2.57 per share, excluding special items.
