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Campbell Soup sees better 2022 margins margins on easing obstacles

Packaged food maker Campbell Soup posted below-expectation quarterly sales on Wednesday but forecast better profit margins for the second half of 2022 thanks to easing supply chain constraints and a fuller workforce. Shares of Camden, New Jersey-based Campbell rose as much as 4% to $43.98 after it also maintained full-year profit targets largely above expectations. The COVID-19 pandemic ripped through supply chains across the food industry, raising costs, delaying deliveries and reducing worker numbers in the United States. However, Campbell Chief Executive Mark Clouse predicted margins would recover through the rest of the year on improved staffing including 3,500 new workers in the last seven months. “We now see absenteeism and vacancy rates trending back to normal levels. This is translating to more production and the beginning of a return to normal distribution and inventory levels,” he said. Home cooking trend Higher prices, and a sustaining of the home cooking boom, have helped rivals including Kraft Heinz, Kellogg and Conagra Brands deliver above-expectation top-line results in recent months. Campbell — known for Swanson broth, Goldfish crackers and Pepperidge Farm cookies — said benefits from recent price changes will be reflected in the current quarter with improved profits coming despite higher inflation than previously expected. The company maintained its full-year adjusted earnings forecast of between $2.75 and $2.85 per share, saying roughly 95% of costs for fiscal 2022 were “fairly well covered.” That compares to analysts’ estimate of $2.79, according to Refinitiv IBES. In the quarter to Jan. 30, however, Campbell’s gross margin fell to 30.3% from 34.4% the previous year due to higher supply expenses and the labor crunch, while organic sales were down 2%. Net sales dropped a bigger-than-expected 3%, while per-share profit of 69 cents came in line with estimates.

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