World's largest soup-maker Campbell Soup Co. (CPB) reported Monday a profit for the third quarter that declined 5 percent from last year as increased promotional spending and input costs ate into the company's margins.
However, adjusted earnings per share and quarterly revenues topped analysts' expectations. The company also backed its guidance for fiscal 2012, but now expects adjusted earnings at the top end, and sales at the lower end of the forecast range.
"We continued to advance our strategies to stabilize and then profitably grow North America soup and simple meals, expand our international presence and continue to drive growth in healthy beverages and baked snacks," President and CEO Denise Morrison said in a statement.
The recessionary environment, which promotes the eat-at-home habit, should help soup makers. But the fact that penny-conscious customers opt for less expensive private labels translates to a dip in demand for their products.
Sales for the quarter edged up to $1.82 billion from $1.81 billion in the same quarter last year, and topped thirteen Wall Street analysts' consensus estimate of $1.81 billion by a whisker.
Higher beverage and snack sales were partially offset by sluggish sales of simple meals.
"Although overall sales trends are improving, we are not satisfied with our performance this quarter. As planned, we focused our marketing efforts on increasing advertising and consumer promotion. We executed well in some businesses, delivering solid sales growth in U.S. Beverages, Pepperidge Farm and Canada. We did not execute as well in others," Morrison added.
The Camden, New Jersey-based company reported net earnings of $177 million or $0.55 per share for the third quarter, lower than $187 million or $0.57 per share in the prior-year quarter.
Excluding items, adjusted net earnings for the quarter declined to $180 million or $0.56 per share from $187 million or $0.57 per share in the year-ago quarter.
On average, 16 analysts polled by Thomson Reuters expected the company to earn $0.52 per share for the third quarter. Analysts' estimates typically exclude special items.
Looking ahead to fiscal 2012, Campbell Soup confirmed its guidance for the year, but now expects adjusted earnings at the top end, and sales at the lower end of the forecast range. Adjusted earnings is now anticipated in a range of $2.35 to $2.42 per share, on projected sales growth between flat and 2 percent.
Street is currently looking for full-year 2012 earnings of $2.37 per share on annual revenues of $7.70 billion.
CPB closed Friday's regular trading session at $33.40, down $0.51 on a volume of 2.59 million shares, lower than the three-month average volume of 1.92 million shares. In the past 52-week period, the stock has been trading in a range of $29.69 to $35.39.
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