Campbell Soup lifts annual sales forecast on steady growth

Cans of Campbell's Soup are displayed in a supermarket in New York.

Reuters -- Campbell Soup Co raised its annual sales and profit forecast after it topped estimates on Wednesday, signalling steady demand for its soups and sauces, even as the company raised prices to offset rising costs.

Despite several price increases this year, packaged food manufacturers in North America have seen little pushback from consumers, as high inflation drives people to cook at home rather than spend on eating out.

The Campbell Soup Chief Executive Officer Mark Clouse said that they had substantially mitigated the inflationary pressure in the quarter because of a combination of inflation-driven pricing actions and productivity improvements.

Campbell's upbeat results follow that of Kraft Heinz, General Mills and Kellogg, who have said that several rounds of price increases have not yet hindered demand for their products.

Even though groceries and essentials are among the last to see a drop in demand during economic downturns, analysts warn that Campbell could soon start to suffer as lower-income and elderly shoppers switch to cheaper store-brand products.

The owner of Prego pasta sauces anticipates net sales to increase 7% to 9% in fiscal year 2023, compared with its previous forecast of a 4% to 6% increase.

It expects adjusted earnings per share between the fiscal year 2023 between $2.90 and $3.00, compared to its previous expectations of $2.85 to $2.95.

The company's net sales rose 15% to $2.58 billion in the first quarter, compared to analysts' expectations of $2.45 billion, according to IBES data from Refinitiv.

The shares of the Camden, New Jersey-based soupmaker rose 2% in premarket trading.