Campbell Soup profits rise 8%
Written on February 24, 2009
Campbell Soup Co. posted a higher-than-expected quarterly profit and said fiscal-year earnings could slightly beat analysts’ estimates as consumers turn to soup as a low-cost meal in the recession.
The world’s largest soup maker said its U.S. soup sales rose 8% and that overall, consumer purchases at stores outpaced the company’s sales to retailers.
Still, total sales fell more than the analysts’ average estimate. Campbell has faced pressure in the soup segment as General Mills Inc.’s (GIS, Fortune 500) Progresso brand has gained market share.
The sales "decline in the quarter was worse than we expected, as volume and mix turned negative in each of the company’s operating segments," JPMorgan analyst Terry Bivens said in a research note.
Campbell’s profit fell 14% to $233 million, or 64 cents a share, in the second quarter ended Feb. 1 from $274 million, or 71 cents a share, a year earlier.
Excluding restructuring costs and other items, earnings were 65 cents a share. Analysts on average forecast 64 cents, according to Reuters Estimates.
Sales fell 4% to $2.12 billion as the stronger dollar curbed overseas revenue, consumers bought less-expensive products and promotional spending increased cheapest personal loan rates. Those factors were partly offset by price increases that Campbell took to cope with higher grain and energy costs.
Analysts forecast sales of $2.22 billion on average, according to Reuters Estimates.
But Campbell (CPB, Fortune 500) also said on Monday that fiscal 2009 earnings-per-share growth would be at the high end of its 5% to 7% forecast range, excluding the impact of the dollar and other one-time items, as it benefits from improving margins and lower interest costs.
Including the currency impact, the company forecast would equal earnings as high as about $2.13 per share for the year, while analysts had forecast $2.12, according to Reuters Estimates.
Campbell warned in November that the stronger dollar would cut into sales and earnings. The company derives about 25% to 30% of sales from outside the United States.
Campbell shares were down 1.1% at $29.14 on the New York Stock Exchange.
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