Campbell Soup profit beats estimates; sales rise 10 percent
(Reuters) - Campbell Soup (CPB.N) reported a higher-than-expected quarterly profit on Friday as gains in its soup and snacks businesses more than offset a decline in its drinks unit.
The company, which also sells V8 juices, Pepperidge Farm cookies and Prego pasta sauces, said U.S. soup sales rose 1 percent from a year earlier. Sales rose 7 percent for snacks and fell 3 percent for U.S. beverages.
Overall, net sales increased 10 percent to $2.33 billion, due mostly to the company's recent acquisition of Bolthouse Farms.
Campbell, the world's largest soup maker, also stood by its forecast for fiscal 2013, which calls for earnings of $2.51 to $2.57 per share on sales growth of 10 percent to 12 percent.
Excluding restructuring and other charges, earnings in Campbell's fiscal second quarter ended January 27 were 70 cents per share. On that basis, analysts' average forecast was 66 cents, according to Thomson Reuters I/B/E/S.
Net income was $190 million, or 60 cents per share, down from $205 million, or 64 cents per share, a year earlier.
The company, which has been trying to reverse weak soup demand with a slew of new products, spent less on advertising in that business. One analyst called that "a ticking time bomb."
"We have seen many food companies in the past cut advertising spending as a percentage of sales," said JPMorgan's Ken Goldman, "and while it usually helps boost (earnings) in the near term, it almost always leads to eroded brand equities and lower sales in the long term."
While Campbell may be spending less in some areas, it said it is spending more efficiently, noting that sales of its Chunky soups were up despite the reduction in ad spending.
Campbell Soup shares jumped as much as 6 percent on Thursday after news of a buyout of rival H.J. Heinz HNZ.N sparked hopes of other acquisitions in the packaged foods industry.
The shares were up 1.5 percent at $39.30 in midday trading on the New York Stock Exchange.
(Reporting by Martinne Geller in New York; Editing by Bernadette Baum, John Wallace and Lisa Von Ahn)