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May 23, 2006

US: Campbell raises forecast as soup sales and prices rise

The Campbell Soup Company yesterday (22 May) reported that third quarter profits increased by 13.7% from the third uarter of last year, driven by increased US soup sales and price hikes.

The Campbell Soup Company yesterday (22 May) reported that third quarter profits increased by 13.7% from the third quarter of last year, driven by increased US soup sales and price hikes.

The New Jersey-based company’s net earnings totalled US$146m for the third quarter, or $0.40 per share, up from $146m reported in the same period last year.

Adjusted net earnings for the first nine-months of the financial year, when various accounting and tax issues are taken into account, were $662m compared with $589m in the prior year, an increase of 12%.

Net sales for the quarter increased by 6% to $1,836m, reflecting the 4% increase in volume and mix and 3% rise in price and sales and reduced promotional spend, which was down 1%.  Net sales for the first nine-months of the fiscal year increased to $6,227m, up 3% from the previous year.

Commenting on the results, Douglas R. Conant, Campbell’s president and CEO, said: “We delivered an outstanding quarter. Our US soup business was exceptionally strong on both the top and bottom line. Our strategy to direct our marketing spending toward better communicating the quality, convenience and value of our soups and away from heavy promotional activity worked very well for the quarter and year to date. Our continued emphasis on innovation and more effective marketing programs, including advertising, is working. As we look ahead to next soup season with our strategic initiatives to introduce lower sodium soups and expand our premium soup offerings, we plan to increase our investment to leverage this year’s momentum.

“Beyond US soup, we also delivered strong results in our US sauce and beverage businesses, as well as Pepperidge Farm and Canada. While we are pleased with the overall performance of our North American business, our international business is performing below our growth expectations. We are taking actions to improve the overall performance of our international portfolio.”

Conant said that based on these results the company had revised previous guidance, which predicted EPS increases of 5% to 7% from FY2005. “Based on our strong year-to-date performance, we now expect that our fiscal 2006 earnings per share will increase between 9% and 10% from this adjusted base,” he said.

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