Campbell Soup Co. today (25 November) reported an increase in first-quarter profits, sending its shares higher, but CEO Denise Morrison cautioned the group was facing challenges.
For the period ended 2 November, net profit rose to US$234m, compared with $172m year-on-year.
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Excluding one-off items, Campbell booked earnings per share of US$0.74 from its continuing businesses. According to a Thomson Reuters poll, analysts had been expecting earnings per share of $0.72.
Operating income jumped 9% to $396m. Sales rose 4% to US$2.25bn.
Morrison, Campbell’s president and CEO, said: “We were encouraged by our organic sales growth across most of our portfolio, particularly in US simple meals and global baking and snacking.”
However, though Morrison described the year as “a solid start”, she had some caution about the months ahead. “We are facing some challenges. Our gross margin performance did not meet our expectations due largely to higher than anticipated commodity costs and supply chain costs. We have plans to offset gross margin pressure in the remainder of the year. We also are facing headwinds from currency. Despite these challenges, we continue to make progress strengthening our core business and expanding into faster-growing spaces.”
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By GlobalDataBased on currency volatility, Campbell reduced the low-end of its full-year forecasts for sales and earnings. Campbell’s sales forecast now ranges from flat to growth of 2%, compared to a 1-2% rise.
It sees adjusted EBIT in a range of a fall of 1% to a 2% increase. It had forecast adjusted EBIT of flat to 2% growth.
Earnings per share is expected to come in at $2.42 to $2.50 per share compared with $2.45 to $2.50 per share.
Shares in Campbell were up 0.92% at $45 at 10:08 ET.
