Campbell Soup’s 1Q Profit Rises 17%; Outlook Raised
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Food & Beverage | 
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11/23/09By Tess Stynes and Anjali Cordeiro
NEW YORK (Dow Jones) – Campbell Soup Co.’s (CPB) fiscal first-quarter earnings rose 17% on improved margins and prior-year restructuring and hedging expenses, though soup sales were down absent last year’s product launches.
Campbell raised its fiscal-year outlook on the strong results to earnings growth of 9% to 11% and sales gains of 4% to 5% amid expectations for favorable foreign-exchange impacts. The company in September projected profit growth of 5% to 7% and a net sales rise of 3% to 4%.
The latest quarter’s earnings topped analysts’ expectations. The company — which makes soups, Pepperidge Farm cookies and V8 juice — has faced sales pressures on beverages and higher-priced offerings. But Campbell has been trying to market its soups as a good option for frugal consumers looking to cut back on eating out. On a conference call, the company said that U.S. soup sales were up 10% in October and that the strength continued into November.
In a research brief, Soleil Securities analyst Ed Roesch said he expects the company’s revenue growth to strengthen over the coming three quarters.
For the quarter ended Nov. 1, Campbell reported a profit of $304 million, or 87 a share, up from $260 million, or 70 cents a share, a year earlier. Excluding items such as prior-year restructuring and commodity-hedging charges, earnings rose to 87 cents a share from 76 cents a share.
Revenue decreased 2% to $2.2 billion, as volume fell 4%, partly offset by higher prices and foreign exchange effects.
Analysts polled by Thomson Reuters forecast earnings of 81 cents a shares on revenue of $2.28 billion.
Gross margin rose to 41.9% from 38.7% on cost cutting and higher prices, as well as prior-year hedging write-downs and restructuring expenses.
U.S. soup sales declined 3%, while they had jumped 12% a year earlier, a gain that was driven by new product launches such as its Campbell’s Select Harvest and V8 premium soups. Campbell shares were recently up 16 cents to $34.28.
