Campbell Soup is getting crushed by carrots (CPB)
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(Reuters) - Campbell Soup Co, the world's largest soupmaker, reported a smaller-than-expected fourth-quarter adjusted profit, hurt by a product recall as well as higher costs and lower sales in its carrot business.
The company gave a full-year adjusted earnings forecast that was also short of analysts' estimates, helping send its shares down more than 4 percent in premarket trading on Thursday.
Campbell Soup's Bolthouse Farms unit was pressured in the quarter by higher carrot costs and lower sales of carrots and carrot ingredients as well as a recall of protein drinks in June.
The unit is part of the Campbell Fresh business, which sells fresh and organic foods. Operating profit at the Campbell Fresh business plunged 62 percent in the quarter ended July 31.
Sales in the business fell 5 percent, declining for the first time since the company started breaking out results of the business last year under a revamped operating structure.
"The performance of our Campbell Fresh business, driven predominantly by execution issues, is disappointing," Chief Executive Denise Morrison said. "I am not pleased with the results of our fourth quarter."
The net loss attributable to Campbell Soup was $81 million due to a $141 million pre-tax impairment charge related to Bolthouse Farms. The company earned $17 million a year earlier.
Excluding items, Campbell Soup earned 46 cents per share in the latest quarter, below analysts average estimate of 50 cents, according to Thomson Reuters I/B/E/S.
Net sales dipped 0.35 percent to $1.69 billion, but was in line with analysts' estimates.
Demand for Campbell Soup's processed foods has weakened as consumers increasingly shift to fresh foods and items perceived as healthier.
In response, the company expanded its organic and fresh food product lines, in part through the acquisitions of Bolthouse Farms and salsa maker Garden Fresh Gourmet. The Campbell Fresh business accounted for about 13 percent of sales in the quarter.
Campbell Soup was taking steps to ensure the business performed to its potential, Morrison said.
The company also forecast adjusted earnings of $3.00 to $3.09 per share for the year ending July, below the average analyst estimate of $3.14.
(Editing by Savio D'Souza)