Campbell Soup Co. (CPB) on Monday reported a 2 percent increase in profit for the third quarter, reflecting higher sales of its condensed as well as ready-to-serve soups. Adjusted earnings per share beat analysts' estimates. Looking ahead to fiscal 2013, Campbell raised its earnings outlook and now projects sales to grow at the upper end of the prior range.
Denise Morrison, president and chief executive officer, said, "In U.S. Soup, our condensed, ready-to-serve soups and broth businesses delivered double-digit sales growth. Global Baking and Snacking also posted solid top-line growth across Pepperidge Farm crackers, cookies and bakery, as well as in Arnott's biscuits. At Bolthouse Farms, we delivered another quarter of strong results in super-premium beverages, carrots and salad dressings."
The Camden, New Jersey-based maker of ready-to-serve soups, pastas and sauces, said that U.S. simple meals sales for the third quarter grew 11 percent from the year-ago period on a 14 percent increase in soup sales, while U.S. beverages sales declined 5 percent.
Global baking and snacking sales rose 5 percent from the prior-year quarter and international simple meals increased 2 percent.
Bolthouse and Foodservice sales for the quarter doubled from last year to $344 million, with the acquisition of Bolthouse Farms contributing $205 million. Sales in North America Foodservice declined 10 percent from last year.
Campbell Soup's gross margin declined to 35.7 percent from 38.8 percent a year ago. Excluding restructuring-related charges, adjusted gross margin for the quarter was 36.7 percent. The decline in gross margin was primarily due to the company's acquisition of Bolthouse Farms, which operates with a lower gross margin structure.
In August 2012, Campbell Soup completed the acquisition of food and beverage company Bolthouse Farms from a fund managed by private equity firm Madison Dearborn Partners, LLC for $1.55 billion in cash.
The company's third-quarter net earnings rose to $181 million or $0.57 per share from $177 million or $0.55 per share in the prior-year period.
Excluding restructuring and restructuring-related charges, adjusted net earnings for the quarter were $195 million or $0.62 per share, compared with $180 million or $0.56 per share in the year-ago quarter. On average, sixteen analysts polled by Thomson Reuters expected the company to report earnings of $0.56 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter increased 15 percent to $2.09 billion from $1.82 billion in the same period last year. Analysts had a consensus revenue estimate of $2.04 billion.
The acquisition of Bolthouse Farms added 11 percent to sales, while volume and mix added 5 percent. Price and sales allowances added 1 percent. Meanwhile, increased promotional spending subtracted 2 percent.
Looking ahead to fiscal 2013, Campbell Soup now expects adjusted earnings to grow between 6 and 7 percent to a range of $2.58 to $2.62, and sales to grow at the upper end of the previously forecast range of 10 to 12 percent.
Earlier, the company expected adjusted earnings per share to increase 3 to 5 percent, to a range of $2.51 to $2.57 per share on sales growth of 10 to 12 percent.
Analysts expect the company to report earnings of $2.56 per share for the year on revenues of $8.54 billion.
The revised guidance includes the estimated impact of the Bolthouse Farms business and excludes the impact of acquisition transaction costs and restructuring charges.
Campbell continues to expect Bolthouse Farms to contribute approximately $750 million to fiscal 2013 sales, but now expects it to add about $0.06 to adjusted earnings per share, including the impact of the suspension of Campbell's strategic share repurchase program.
This guidance includes the estimated impact of the suspension of Campbell's strategic share repurchase program.
CPB closed Friday's trading at $47.63. In Monday's pre-market, the stock is adding $1.35 or 2.83 percent to $49.00.
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