(Refiles to fix typographical error in fourth paragraph; adds
company, analyst comments, byline. Updates share move) By
CHICAGO, Sept 11 Campbell Soup Co (CPB.N)
posted a better-than-expected quarterly profit as price
increases and newer products such as lower sodium soups helped
offset higher commodity costs.
The company said on Thursday that sales growth in the just
started 2009 fiscal year should exceed its long-term
expectations, with earnings up 5 percent to 7 percent,
excluding unusual items.
Campbell shares were up over 1 percent at $38.06 at midday
on Thursday on the New York Stock Exchange.
Campbell has introduced several new products in the past
year to tap into U.S. consumers' desire to eat healthier food.
Its fall lineup includes new soups under the Select Harvest
label that emphasize ingredients such as farm-grown vegetables
and "wholesome grains."
U.S. soup sales rose 6 percent in the company's fourth
quarter, excluding the impact of an extra week in the fiscal
year. That follows on a 3 percent drop in U.S. soup sales in
the previous quarter.
Chief Executive Douglas Conant told analysts on a
conference call it was hard to say what part of the increase
was due to consumers seeking lower-priced meal options, such as
soup, due to a weak U.S. economy, rather than new products and
other Campbell efforts to bolster the soup business.
"I think it's probably an even balance in where (the sales
increase) is coming from," Edward Jones analyst Matt Arnold
said. "It's a really good category to be in in terms of a value
Overall, profit was $89 million, or 24 cents a share, in
the company's fiscal fourth quarter that ended Aug. 3, compared
with $61 million, or 16 cents a share, a year earlier.
Excluding restructuring items, Campbell earned 26 cents a
share. On that basis, analysts forecast 25 cents a share,
according to Reuters Estimates.
COSTS ON THE RISE
Sales rose 13 percent to $1.72 billion, although much of
the increase was due to the extra week in the quarter and the
benefit of the weak dollar, which boosts the dollar-value of
The fourth quarter tends to be the slowest quarter for
Campbell, as fewer U.S. consumers eat soup during warm summer
Like most food companies, Campbell has been hit by rising
costs for commodities such as wheat and energy, although those
costs have eased in recently.
Such costs cut into Campbell's profit margins and the
company plans to counter the trend with price increases and
productivity improvements in 2009, Conant said.
The company expects costs for ingredients, packaging and
energy to rise 9 percent to 10 percent in 2009, up from the 7
percent to 8 percent increase it saw in 2008.
More price increases for Campbell products are also working
their way through the system and should be seen on store
shelves in the first half of 2009, Conant said.
Gross margin fell to 39.6 percent in 2008 from 40.6 percent
a year earlier, the company said.
"We're determined to do a better job protecting margins
this year than we did last year," Conant said.
For 2009, Campbell expected sales to increase more than the
company's 3 percent to 4 percent target, excluding divestitures
and the extra week in 2008.
The company forecast an adjusted earnings increase of 5
percent to 7 percent from a base of $2.09 a share, a forecast
that equals about $2.19 to $2.23 a share. Analysts on average
forecast $2.23 a share, according to Reuters Estimates.
(Editing by Steve Orlofsky and Andre Grenon)