By Nivedita Balu
(Reuters) -Campbell Soup Co on Wednesday slashed its forecast for annual earnings after the company's quarterly results fell short of estimates, hurt by higher costs related to raw materials and transportation.
The canned soupmaker's shares fell about 6% to $46.30.
Campbell, known for Swanson broth, Prego pasta sauces and Pepperidge Farm cookies, expects higher costs to hurt margins even as it plans price hikes for later this year.
Shipping logjams globally and surging demand on the back of a resurgent U.S. economy have led food manufacturers to sacrifice their profit margin as costs rose for items across the board.
"We expected this to be a challenging quarter ... but it was made even tougher by several additional factors," Campbell Chief Executive Officer Mark Clouse said, adding that he expects price price increases to offset some margin pressures.
Campbell also struggled with production and supply disruptions due to the winter storms in Texas earlier this year.
Price hikes are a "cold comfort" and expect investors to view food companies with a skeptical eye in the next few quarters, J.P.Morgan analyst Ken Goldman said.
Campbell forecast fiscal 2021 adjusted earnings between $2.90 and $2.93 per share, compared with its prior forecast of $3.03 to $3.11 per share. It expects sales to fall at least 3.0%, compared with the minimum 2.5% fall projected earlier.
The company, which saw an uptick in demand during peak pandemic from consumers staying at home, said sales of snacks fell 8% in the third quarter, while sales of its soups and pasta sauces fell 14%.
On an adjusted basis, Campbell earned 57 cents per share, missing estimates of 66 cents, according to IBES data from Refinitiv. Net sales fell about 11% to $1.98 billion, compared with estimates of $2.00 billion.