US food group Campbell Soup Co. said it “feels good” about its current position, particularly in the US soup sector, despite posting a drop in annual earnings today (11 September).
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Douglas Conant, Campbell’s president and CEO, said that the company reported “very good” sales growth for the past year in US soup.
“The convenience sector is still valued, it’s still driving incremental sales and so we’re comfortable where we are. We expected to do better this year but it is otherwise a very positive story for our soup portfolio, a story that has quite frankly never been better across all segments,” Conant said.
For the fiscal year, sales for US soup, sauces and beverages increased 3% to $3.78bn, while for the soup category alone, sales for the full year increased 5%.
For the fourth-quarter, however, sales for US soup, sauces and beverages were down 3% to US$650m, while US soup sales alone for the quarter increased 1%.
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By GlobalDataConant told analysts that it expects the impact of currency to improve next year, despite it hitting the company’s full-year sales today.
Conant said that, while currency rates over the last few weeks had been “fairly volatile”, its guidance for 2010 includes an assumption of “slightly favourable currency”.
“To be completely clear, as we said last year when we went through so much currency headwind, our long-term growth model targets assume currency in, so we believe that over time the ups and downs of currency, particularly in the developed markets, will mostly offset themselves,” Conant said.
“Over time we believe we can hit top-line EBIT and EPS growth, currency included. Last year we had a very negative dislocation with currency. This year our plan assumes a slightly favourable impact from currency. Hopefully there is some upside to that but we have a long way to go.”
The company today posted a drop in full-year earnings, hit by currency headwinds and charges. Net earnings for the 12 months to 2 August dropped to US$736m from $1.16bn in the prior fiscal year.
Net sales were also down, by 5% to $7.58bn as a result of divestitures and acquisitions, as well as currency effects.
Nonetheless, Conant said Campbell’s strategy for the coming year will be to focus on a “few core categories” and “developing world-class capabilities in those categories”, and ruled out any M&A activity.
“I think we’re better positioned to deliver our numbers and greater shareholder value, in the near term and the long-term, just the way we’re positioned today. It will be interesting to see how the environment shapes up, there are several companies that are looking to improve their performance in the near term and they make some decisions that I may not make, but in our case we’re very happy where we are.”
Conant added that the company would continue to be “very focused” on the value proposition.
“We recognise that the consumer is under significant pressure in this economy, unemployment being part of that pressure. We view this years economy are somewhat similar to the way we viewed 2009.”
