By Martinne Geller
Feb 15 (Reuters) - Campbell Soup reported a higher-than-expected profit for its fiscal second quarter on Friday but did not raise its full-year outlook, saying the back half should bring a steeper tax rate and smaller boost from share buybacks.
Shares of the company were up 1.4 percent in afternoon trade. They jumped as much as 6 percent on Thursday after news of a buyout of rival H.J. Heinz sparked hopes of other acquisitions in the packaged foods industry.
Campbell, which Wall Street has long viewed as a good partner for Heinz, said it has been trying to be more active in terms of mergers. If an opportunity to fill a hole in its portfolio presented itself, the company would be interested, said Chief Financial Officer Craig Owens.
Chief Executive Denise Morrison declined to comment on the Heinz deal.
Campbell said U.S. soup sales rose 1 percent from a year earlier, while sales increased 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.
Net income was $190 million, or 60 cents per share, down from $205 million, or 64 cents per share, a year earlier.
Excluding restructuring and other charges, earnings in Campbell’s fiscal second quarter, ended Jan. 27, were 70 cents per share. On that basis, analysts’ average forecast was 66 cents, according to Thomson Reuters I/B/E/S.
Campbell, the world’s largest soup maker, 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.
The company, which has been trying to reverse weak soup sales with 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.
The company said its baked goods business benefited in the quarter from the bankruptcy of Hostess Brands, which resulted in an absence of that company’s products.
The shares were up 49 cents, or 1.3 percent, at $39.21 in afternoon trading on the New York Stock Exchange.