The Campbell's Company (TSX: CPB.O) beat third-quarter sales and profit estimates with the eat-at-home trend boosting strong demand for canned foods and soups.
The company attributes much of the 12.31% quarterly earnings surprise to consumers opting for more affordable products and avoiding costly dining-outs amid rising fears of a potential recession and price hikes in the U.S. due to hefty tariffs.
Excluding tariffs, the company maintained its FY25 net sales growth forecast of 6% to 8%.
However, owing to weak demand within Campbell's key growth engines of snacks and Rao's brand, annual adjusted profit per share is projected to be at the lower end of its prior range of $2.95 to $3.05.
"Consumers continue to cook at home and focus their spending on products that help them stretch their food budgets," Campbell's CEO Mick Beekhuizen told the market yesterday.
While Beekhuizen acknowledged the mixed performance in the Snacks segment, he also emphasised the company's focus on adjusting plans to remain competitive across its full brand portfolio.
After factoring into the impact of the levies currently in place, Campbell's expects a hit of between 3 cents and 5 cents per share.
Meanwhile, the company is pursuing possible pricing actions to minimise the tariff impact.
The company delivered around $110 million in savings under its $250 million cost savings program announced in September 2024.
During the quarter, Campbell's completed the sale of its Noosa yoghurt business and the Pop Secret popcorn business. The Sovos Brands acquisition contributed positively to the company's performance.
Key Q3 numbers
- Net sales rose 4% to $2.48 billion during the quarter compared with analysts' average estimate of $2.43 billion.
- Meals and beverages volumes rose 7%.
- Revenues of $2.48 billion surpassed consensus by 1.55%.
- The snacks business reported a 5% fall.
- Adjusted per-share profit of 73 cents also surpassed the estimate of 66 cents.
The company has topped consensus revenue estimates once over the last four quarters.
Campbell’s shares have fallen around 18% year to date and were up about 1% in early trading yesterday.
FY25 guidance includes the benefit of a 53rd week. This is estimated to contribute approximately two points of growth to reported net sales and adjusted earnings, along with around $0.05 of adjusted EPS.
