© Reuters. The logo and ticker for Campbell Soup Co. are displayed on a screen on the floor of the NYSE in New York
(Reuters) – Campbell Soup (NYSE:) Co on Wednesday forecast annual earnings growth as its cost-saving measures pay off, while sales are likely to fall as COVID-19 vaccine rollout speeds up and customers return to restaurants.
Packaged foods makers have benefited from rising demand for their ready-to-eat or quick-fix meals as restaurants mostly remained shut during the pandemic and people avoided dining out for fear of contracting the coronavirus.
A gradual reopening of restaurants and the rollout of vaccines, however, is beginning to impact consumers’ reliance on packaged food.
While Campbell’s costs have risen due to pandemic-related and labor expenses, higher raw material costs and increased marketing spend, the company said it was on track to save $850 million by the end of fiscal 2022.
It forecast adjusted earnings between $3.03 and $3.11 per share for fiscal 2021, compared with analysts’ average estimate of $3.03 per share, according to IBES data from Refinitiv.
“Nearly 75% of our brands grew or held share which was an important goal for the quarter… we are confident in the long-term growth potential of Campbell,” Chief Executive Officer Mark Clouse said.
Campbell sales, which surged during the second half of its fiscal year 2020 as consumers stocked up on snacks and soups before lockdowns were put in place, are expected to fall 3.5% to 2.5% this year, the company said.
Second-quarter sales rose 5.4% to $2.28 billion, but fell below expectations, hurt by declines in its foodservices segment that sells products to bakeries and restaurants, and pandemic-led supply constraints.
On an adjusted basis, the company earned 84 cents per share, meeting expectations.
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