US giant Campbell Soup Co. raised its full-year revenue forecast after favorable second-quarter results that revealed sales at its snacks division rose 15% year-on-year.
Campbell now expects full fiscal year 2023 net sales to rise 8.5-10% year-over-year to US$8.56bn, compared with previous guidance of a 7-9% increase. .
Speaking to analysts yesterday (March 8) after the release of the figures for the three months through January 29, CEO Mark Clouse said: “In the second quarter, we had the strongest share growth in both crackers as in savory snacks among all the major brand players, even more impressive as we are among the few competing in these two critical categories.Although we benefit from pricing, we also drive a favorable volume mix.An additional important note is that Snacks margin also improved while spending on marketing and sales increased by 19%.”
The performance of its snack food division, fueled by US consumers’ appetite for cookies and crackers, was a major contributor to Campbell’s reporting net sales for the quarter of $2.48 billion, up 12% over the same period last year. last year. EBIT was 8% higher than $350 million.
During the half-year period, net sales increased 14% and EBIT 12%.
In addition to Campbell’s benefiting from the performance of its snack brands, which include Goldfish crackers and Cape Cod potato chips, Clouse suggested that the results “reflect the strength of our strategic actions in recent years” and were “supported by favorable net prices driven by inflation. realization and strong consumer demand for our brands.”
He added: “We have also successfully navigated the dynamic economic environment, using a variety of levers to mitigate inflation, including targeted pricing, cost-saving initiatives, and productivity improvements, and have achieved well below historical levels of elasticity. as volume/mixture decreases persist. modest.”
However, in a nod to competition from lower-priced private label products, Clouse said Campbell remains “very attentive to price differences across key brands and is closely monitoring elasticities.”
He added: “In places where we are experiencing greater impacts from competition or trends from slower categories, such as condensed super broth, we are taking appropriate and pragmatic steps to remain competitive and drive sustained profitable growth.”
When asked by an analyst about the competition he faces in the soup category, Clouse said: “[These] these are really important competitive battles that we feel are critical to winning. And so far, we feel very good about how we’re performing in those spaces.”
The newly installed chief financial officer, Carrie Anderson, told analysts that Campbell expects “core inflation” to moderate during the year.
“We saw some improvements as we were from Q1 to Q2 in some categories softening like flour, resins, meat and steel, and even some of the transportation costs,” he said.
“As I think about the second half of the year, I anticipate that [we will be] in that range of 10% to 11% above inflation”.
In January, Campbell laid out plans to close two snack division office locations.
Campbell’s decision to close offices in North Carolina and Connecticut is part of a plan to consolidate activities at its headquarters in Camden, New Jersey. Affected personnel will have the opportunity to relocate. The company said it will invest $50 million in its headquarters over the next three years to “improve” the facilities.