Campbell Soup Reports Strong Quarter

Strong 3rd for Campbell Soup
The Campbell Soup had a strong third quarter, ending on January 26. The company reported that its shares climbed by five percent on Friday. The latest numbers follow a report that the company boasted a 71 percent gain in its third-quarter earnings. Campbell states that quarterly earnings were $325 million, an increase of approximately $190 million a year ago. Shares closed at $43.01 on Friday. The earnings per share increased from 60 cents to $1.03 in the past year.

The increase was given a boost with a $90 million sale of a European soup business. Soup sales in the U.S. were five percent higher over past year. Meanwhile the holiday season saw strong performance of dinner sauces such as Prego white sauces. Campbell Soup’s fastest-growing product lines are in its baked goods division. This includes Pepperidge Farm cookies and Goldfish crackers. The division to which Pepperidge Farm belongs reported a 14 percent increase in sales worldwide. CEO Denise Morrison expects even stronger performance by Pepperidge Farm.

Cooking sauce sales in the U.S. rose 16 percent, as Prego pasta sauce remained a strong generator of revenue. The company’s newest addition, baby food manufacturer Plum Organics, was also profitable. Morrison went on to state that Campbell will remain focused on strengthening core business and expanding into higher-growth spaces.

The company’s most profitable product line remains its name brand soup line, focusing on the budget-focused customer. Last month the corporation added eight new soups, including company’s first Latin-inspired cooking soups. Campbell Soup is now a strong competitor of Goya Foods, which had been the major player in the Latino canned foods. Morrison reported that Campbell expects U.S. Soup business to benefit from the new soups that were recently launched last quarter.

Campbell shed its European simple meals business in October of 2013, selling too CVC Capital Partners. The sale resulted in a net gain of 28 cents a share for the most recent period. Campbell Soup stated last November that it expected a gain of 24 cents per share in the quarter from to the sale.

The company still still had challenges, specifically related to international sales. International Simple Meals and Beverages sales of $213 million were down nine percent, or $21 million, compared to the prior year quarter. A negative impact from global currency exchange had a negative impact on the company’s global operations as well. Campbell Soup also had a small three percent setback from an operation Mexico. Morrison stated that her company brought in new leadership for Australia and Asia Pacific. Campbell has developed a more focused plan for its biscuit business and implemented cost cutting measures for that region. Domestic business also faces stiff competition recently, primarily from smaller companies and private labels.

Campbell Soup is off to a strong start followings its most recent quarterly reports. The company has shown strong insight by selling off nonperforming foreign business divisions while focusing largely on its profitable domestic market. If Denise Morrison and her advisers continue to make intelligent marketing and personnel decisions, the corporation could be on the eve of a strong move.

By Ian Erickson
USA Today
Wall Street Journal