US foods giant Campbell Soup, which owns a portfolio of popular consumer brands including soups, juices and the iconic Arnott's biscuits range, has warned American investors that the Australian trading environment remains tough with sales in the region down in 2012.
Denise Morrison, the chief executive and president of the $US11 billion New Jersey-based Campbell Soup company told US investors at an earnings update this week that following a visit to Australia she had witnessed first hand tight consumer spending habits and historically high savings rates.
"I just came back from Australia and had extensive meetings with the team and the customers there. And I think the consumer environment is still challenged. The consumers' savings rate is probably one of the highest it's ever been, and there is some concern over that," Ms Morrison said during a conference call for Campbell Soup's fourth quarter earnings results.
She said the Australian business had suffered because of the downturn in consumer spending and a challenging trading environment with sales in Arnott's comparable to prior year as strong growth in Indonesia was offset by declines in Australia.
"Arnott's performance was impacted by a difficult trading environment in Australia," said B. Craig Owens, chief financial officer.
"As a result, Arnott's sales declined for the year, reflecting an increase in promotional spending that was not successful in increasing total sales."
There was also a decline in its Australian soup business.
Ms Morrison and her executive team were asked directly by US analysts about the state of the business in Australia and the region's tough trading conditions.
In November last year Ms Morrison told investors and analysts Australian shoppers were increasingly reflecting a "recessionary mindset" that was having an impact on grocery sales.
She told the earnings conference this week Campbell Soup remain committed to the Australian market.
"The [Australian] team has recognised that this is an environment that we have to play in probably for a while. And so the joint business plans that we've been able to work with in the marketplace are very encouraging.
"And so we - during F '12, we actually continued to invest in brand building and the innovation pipeline, so we believe that we have strong plans going into 2013 that, hopefully, adjust to the situation."
A number of high profile US CEOs have publicly spoken about their concerns over the poor Australian economy recently. In July Don Thompson, the newly appointed chief executive of McDonald's, the globe's largest fast-food chain, singled out Australia as having "fragile consumer confidence".
In April the chief executive of Illinois Tool Works, a 100 year-old manufacturer and Fortune 200 company, told an audience of US analysts that the Australian economy was "slowing significantly", and that that the downturn had taken his company by surprise.