The Campbell Company anticipates significant challenges ahead, as tariffs are expected to drive a longer-term decline in its base earnings for the upcoming fiscal year.
While reporting results for the 2025 financial year ending August 3, president and CEO Mick Beekhuizen stated that increasing prices will be essential to counteract tariff impacts, noting that such adjustments will be “surgical” in 2026.
The owner of the Campbell soups brand highlighted that a significant portion of the tariff effect stems from steel and aluminum, essential materials for canning their products.
“Gross tariffs are projected at approximately 4% of the cost of products sold; about 60% is linked to Section 232 steel and aluminum tariffs, with the remainder mainly from global IEEPA [International Emergency Economic Powers Act] tariffs,” CFO Carrie Anderson explained.
“We anticipate mitigating approximately 60% of this impact in fiscal 2026 through various initiatives, including improved inventory management, collaboration with suppliers, exploring alternative sourcing opportunities, and implementing productivity and cost-saving measures, accompanied by responsible pricing actions when necessary.”
Anderson also noted that core inflation—excluding tariff impacts—is expected to remain in the low single digits for the new fiscal year. “We are intensifying our focus on productivity with planned initiatives amounting to approximately 5% of the cost of products sold, incorporating tariff mitigation efforts, and expect roughly $70 million in enterprise cost savings,” she added.
In fiscal 2026, adjusted EPS is projected to decline by 12-18%, following a 4% decrease to $2.97 for the completed year, which encompassed a 53-week reporting period. This projection accounts for the impact from the divestitures of Noosa and Pop Secret.
“On a comparable 52-week basis, and excluding the effects of divestitures, approximately two-thirds of the decline in fiscal 2026 adjusted EPS guidance is attributable to the estimated net tariff impact. The remaining one-third results from changes in the base business,” Anderson elaborated.
Beekhuizen noted that sourcing steel and aluminum from overseas has become necessary. These materials, crucial for production, are referred to as “food grade tinplate” for canned products.
“There is insufficient capacity or supply within the United States. If local options were available, we would utilize them,” he stated.
“However, we must import these crucial raw materials, which incurs a 50% tariff.”
Anderson indicated that the bulk of the tariff “headwind” will affect Campbell’s meals and beverages division, which includes the soups and the premium pasta sauces brand, Rao’s, acquired from Sovos Brands.
Given that Rao’s is produced in Italy, it will also face IEEPA tariffs. Rao’s generated high single-digit net sales growth on a proforma basis in fiscal 2025.
For the concluded year, Campbell’s net sales increased by 6% to $10.3 billion on a reported basis, although organic sales decreased by 1%.
Adjusted EBIT rose 2% to $1.5 billion. Across the group, net price realization appeared to be negative 1%, with volume and mix reflecting similar trends. By division, meals and beverage pricing remained at minus 1%, with volume and mix up by 1%. Snacks pricing remained unchanged, while volume and mix decreased by 3%.
For fiscal 2026, Campbell anticipates reported net sales to decline 2% to flat, including the impact of divestitures. Organic net sales are predicted to range from a 1% decrease to a 1% increase, indicating continued growth in meals and beverages as well as stabilization in snacks during the latter half of the year, projecting modest positive net price contributions compared to fiscal 2025, according to Anderson.
Expected adjusted EBIT is likely to decline by 9% to 13%.
