(Reuters) -Campbell Soup Co forecast annual profit below Wall Street expectations on Thursday due to persistently high raw material costs and investments into promotions going forward.
Several packaged food companies have been grappling with higher expenses of inputs including olive oil, cocoa, packaging, labor and warehousing, prompting them to undertake several rounds of price increases last year to lift margins.
The company forecast adjusted earnings between $3.12 and $3.22 per share in fiscal 2025, while analysts on average were expecting annual profit of $3.23 per share, according to LSEG data.
In the fourth quarter ended July 28, its adjusted gross profit margin increased 80 basis points to 31.4%.
Excluding items, Campbell Soup (NYSE:) posted earnings per share of 63 cents, compared with estimates of 62 cents.
The prices increases have eaten into demand for certain brands as price-conscious consumers favor cheaper private-label products.
Organic sales at its snacks division declined 3% in the quarter, while its net sales of $2.29 billion missed estimates for a 11.7% rise to $2.31 billion.
Still, the company expects net sales to rise between 9% and 11% in fiscal 2025, above estimates for a 8.92% jump, betting on steady demand for its soups and ready-to-eat meals.
Shares of the company, known for its Prego pasta sauces and Pepperidge Farm cookies, dropped 1% in premarket trading.