Campbell Soup Co. (CPB) said Friday its second-quarter profit declined due to higher costs and a slip in revenues. Despite this, the earnings number surpassed analysts' estimate and the company reiterated its fiscal year 2012 guidance.
For the year, Campbell continues to expect a decline in adjusted earnings per share of between 7 and 5 percent. The guidance is seen in the range of $2.35 to $2.42 per share compared to the 2011 adjusted base of $2.54. Analysts polled by Thomson Reuters expect full-year earnings of $2.36 per share. Analysts' estimates typically exclude special items.
Campbell expects net sales growth to be flat to up 2 percent in 2012, despite sales declining 1 percent in the second quarter. Volume and mix hurt the quarter's sales by 3 percent and higher promotional spending dragged another 1 percent. Price and sales allowances added 3 percent.
Sales for U.S. Simple Meals slipped 2 percent with declines in soup sales and sauces. International Simple Meals and Beverages generated 5 percent lower sales in the quarter, primarly due to weak performance in Europe and Canada.
U.S. Beverages showed a 4 percent rise in sales, driven by growth in "V8 Splash" juice drinks and "V8 V-Fusion" juice. Sales in this segment benefited from two new items and increased advertising supporting the new campaign featuring Jackie Chan.
Sales rose 9 percent in North America Foodservice, helped by volume-driven gains in fresh chilled soup sold at retail, the company noted.
Advertising and consumer promotion expense rose 6 percent amid investment in key brands. Effective tax rate increased sharply from last year - all these affecting the bottom line.
Second-quarter net earnings dropped to $205 million or $0.64 per share from $239 million or $0.71 per share. On average, 16 analysts expected earnings of $0.62 per share for the quarter.
Sales dropped to $2.11 billion from $2.13 billion, missing analysts' estimate of $2.12 billion by a whisker.
CPB closed on Thursday at $32.06, compared to the previous close of $31.84, on 2.69 million shares.
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