Campbell Soup Co. has admitted that annual profits in the company’s next financial year could fall by up to 6%.
The US soup maker said adjusted earnings per share could drop by 4-6% in fiscal 2012, which starts in August.
Go deeper with GlobalData
The company also forecast a 6-8% fall in adjusted EBIT and said it expects net sales to be either flat when compared to fiscal 2011 or to increase by 2%.
Campbell issued its outlook for its next financial year today (12 July) in a major meeting with investors at which COO Denise Morrison, who is set to become the company’s president and CEO next month, outlined the company’s new “strategic direction”.
The company said its strategy would focus on expanding in three “core categories” – simple meals, backed snacks and healthy beverages.
Campbell said it also saw “consumer-driven innovation in products and packaging” as the “primary driver” of organic growth.
The group also wants to expand its international presence, particularly in emerging markets. Two weeks ago, Campbell said it would quit Russia after four years in the market as part of a series of measures to reduce costs.
Morrison said Campbell needed to invest behind its new strategy, which, she said, would make fiscal 2012 a year of transition for the company.
“Implementing our new strategic direction will require substantial investment to fund our new innovation process, accelerate innovation across our portfolio and reinvigorate consumer-focused marketing to expand the equities of important brands,” Morrison said. “Thus, fiscal 2012 will be a year of transition and investment, in which we will build the foundation for a sustainable, profitable growth trajectory in fiscal 2013 and beyond.”
Campbell also updated its forecasts for its current financial year. In May, when Campbell published its third-quarter results, the company said it expected its annual results to come in at the “high end” of estimates it made in February. Then, Campbell said it expected EPS to fall by 1-3% from the adjusted fiscal 2010 base of US$2.47. The company also warned that adjusted EBIT would fall by 3-5% and that net sales could rise by 1% but could also drop by as much as 1%.
Today, Campbell said it expects its fiscal 2011 net sales to be “comparable” to the year before. It forecast a 2% fall in adjusted EBIT and said adjusted EPS could rise by “approximately 1%”. The company said the fiscal 2011 guidance excluded the impact of the restructuring programme announced last month.
Looking ahead, Morrison said Campbell was “fully committed” to the company’s “strategic transition” and said the business was “convinced” it was “the right course for shareholders”.
She added: “When you look at Campbell a few years from now, you will see a company with a broader and stronger flywheel for growth. We will be better balanced across our product portfolios and in our international footprint, better positioned to compete based on our impressive brand strengths and better equipped to respond to the evolving needs of both our loyal consumer base and other important consumer groups.”
Shares in Campbell were up 1.76% at $34.74 at 11:27 ET today.
