Campbell Soup warns of weak second-quarter profit due to carrot supply delays

(Reuters) - Campbell Soup Co CPB.N, which missed Wall Street estimates for first-quarter profit and revenue, said harvest delays of its carrot crop in California and higher costs are likely to hurt its earnings in the current quarter.

Tins of Campbell's Tomato Soup are seen on a supermarket shelf in Seattle, Washington, U.S. February 10, 2017. REUTERS/Chris Helgren

Shares of the company were down 7 percent at $46.39 in late morning trading.

The company, which sells the Bolthouse Farms of fresh juices, said severe weather hurt crop production, leading the world’s largest soup maker to delay supply of carrot-based products to its customers.

Campbell, which expects delays to pick up in December, said transport disruptions have led to a big rise in supply-chain costs.

“Given the seasonality of our business and the timing of these unforeseen cost issues, we expect to see significantly weaker performance in the second quarter, followed by improvements in the second half,” Campbell’s Finance Chief Anthony DiSilvestro said on the conference call.

The company also said delays in finalizing an agreement with a key customer over a promotional program would deepen its soup sales losses in the United States in the first half of the year.

J.P. Morgan analyst Ken Goldman said Campbell’s weak results underscore the lower demand that packaged-food companies have been facing.

“But we remind investors that the two major problems (a lost promotion at Wall-Mart, carrots) are CPB-specific,” Goldman said.

The company’s fresh food unit, which includes Bolthouse Farms and Garden Fresh Gourmet brands, has been witnessing sales declines since last year due to a premature harvest of carrots and recall of protein drinks.

In the first quarter, the Pepperidge Farm snacks maker said gross margins fell 2.4 percent, leading the company to cut its fiscal 2018 adjusted profit to $2.95 to $3.02 per share from previously stated $3.04 to $3.11.

This was below the analysts’ average estimate of $3.05 per share, according to Thomson Reuters I/B/E/S.

Excluding items, Campbell earned 92 cents per share on revenue of $2.16 billion in the first quarter ended Oct. 29.

Analysts on average expected revenue of $2.17 billion and profit of 97 cents per share.

Reporting by Gayathree Ganesan in Bengaluru; Editing by Arun Koyyur