Campbell's sales fall as Q3 results hit by tariff, inflation headwinds

(Sharecast News) - Soup and snacks food manufacturer Campbell's reiterated its full-year guidance this fiscal year despite a dip in sales over its third quarter, as subdued demand outweighed higher prices.

The company reported net sales of $2.37bn for the three months to 3 May, down 4% on the previous year on both a reported and organic basis. That followed a 5% fall in net sales in the second quarter and a 3% drop in the first.

Volume/mix changes had a 5% negative impact on the top line in the third quarter, only partially offset by a positive 1% impact from net price realisation.

Sales fell 4% across both the snacks business and the meals and beverages arm, to $940m and $1.43bn respectively.

Gross profits were down 11% at $650m, with inflation and tariff-driven headwinds bringing the gross profit margin down 190 basis points to 27.5%. Adjusted earnings before interest and tax were down 24% at $274m.

However, Campbell's said its $375m targeted cost savings programme by FY28 - $200m of which has now been achieved after $20m in savings in the third quarter - should help to higher costs going forward.

Looking ahead, the company continues to expect 1-2% decline in organic net sales over the full fiscal year, and a 17-20% decline in adjusted earnings before interest and tax. The full-year guidance had already been cut earlier this year.

"Our third quarter results were generally in-line with our expectations but remained under pressure, reflecting top-line softness and inflation-driven margin headwinds," said Mick Beekhuizen, the company's chief executive and president.

"Across the company, we are focused on simplifying the business, accelerating productivity and cost savings, and creating fuel to invest behind our strongest opportunities. We are moving with urgency and remain confident in the long-term strength of our portfolio and our ability to create shareholder value."

The stock was down 0.8% at $21.51 by 1531 BST.