Campbell’s profits rise on snack sales, as soup sales slump
For the third quarter ended May 1, Campbell’s reported net income of $187m, or 57 cents a share, compared to $168m, or 49 cents a share, a year earlier. Overall sales increased 1 percent year-on-year to $1.81bn, from $1.80bn in 2010. Sales in the company’s baking and snacks division climbed 10 percent, while soup sales fell 8 percent.
The company had reported losses in three back-to-back quarters and said it is trying to reverse the trend by focusing on ‘brand-building’ marketing initiatives, moving away from the heavy discounting of its US soup brands it had implemented during the first half of the year.
“While we are encouraged by our progress, we are not satisfied with this performance and clearly have more work to do,” said Campbell’s Chief Operating Officer Denise Morrison. “…Over time we anticipate that these efforts, combined with accelerated and targeted innovation, will improve price realization and strengthen brand equity.”
Campbell’s said in a statement that it expects to come in at the ‘high end’ of its earnings guidance for the full 2011 fiscal year, after revising it downward in February.
However, although US sales of soup, sauces and beverages continued to fall during the quarter, other divisions performed better, with baking and snacks sales rising 10 percent, North American foodservice rising 5 percent, and international soup, sauce and beverages seeing a 7 percent increase, mainly as a result of currency fluctuations.
“In Baking and Snacking, our second-largest segment, we continued to deliver strong performance with double-digit sales increases and strong bottom-line results this quarter,” Morrison said.
The hardest hit part of the company’s US soup division was its ready-to-serve sector, which saw sales slip 15 percent in the third quarter compared to the same period a year ago. Campbell’s said this reflected declines in both canned and microwavable soups.
