Campbell Soup Profit Tops Forecasts

Campbell Soup Co. (CPB) said Monday that its profit inched higher in the fiscal third quarter as strong domestic sales of baking and snack products and rising international sales of soup and sauces offset weak demand for soups, sauces and beverages in the United States.

Shares of Campbell jumped $1.66, or 5.5 percent, to $32 during premarket activity, topping a 52-week high of $30.60 from last week.

Quarterly income grew to $146 million, or 35 cents per share, in the three months ended May 1 from $142 million, or 34 cents, in the year-ago period, which included a gain of 2 cents per share from the settlement of a class-action lawsuit.

The latest earnings beat the average estimate of 33 cents per share from analysts surveyed by Thomson Financial.

Sales totaled $1.74 billion, a gain of 4 percent from $1.67 billion a year ago but slightly below the $1.76 billion targeted by Wall Street analysts. Campbell also attributed the revenue increase to favorable currency exchange rates and higher prices and sales allowances; it increased U.S. prices for many soups, sauces and beverages an average of 4.8 percent on Feb. 28.

Still, the company said domestic sales of soups, sauces and beverages slipped 2 percent to $627 million. Sales of baking and snack products jumped 8 percent to $421 million. International soup and sauce sales grew 6 percent to $435 million.

Douglas R. Conant, Campbell's president and chief executive officer, said sales of condensed soup, which have been sliding or stagnant for several years, increased 4 percent in the third quarter. Condensed soup (search), Campbell's iconic and top-selling product, also rose 4 percent in its second quarter after a 10 percent first-quarter jump.

That turnaround meant sales of Campbell's broth, condensed and ready-to-serve soups were all higher for the first time in at least five years. Over that time, Campbell has been improving the ingredients, packaging, marketing and even supermarket shelf displays for condensed soups, stabilizing and now boosting their sales, officials said.

"We will compete, basically do whatever it takes to win the next soup season," Conant told analysts during a morning conference call.

"We are very pleased with the performance of Pepperidge Farm (search), Arnott's biscuits, Godiva Chocolatier (search) and our Away From Home Soup business," he added.

Campbell said cash flow from operations was strong, rising to $772 million for the first nine months of fiscal 2005, up from $576 million a year earlier.

Looking ahead, Campbell backed its forecast for annual earnings of $1.66 to $1.69 per share; analysts are expecting $1.68. Conant said he expects growth in fiscal 2006 to match the company's targets of 3 percent to 4 percent for sales and 5 percent to 7 percent for earnings per share, with the official forecast coming in September.

For the first nine months, Campbell posted income of $611 million, or $1.48 per share, up from $588 million, or $1.43 per share, in the year-ago period. Sales for the first nine months totaled $6.1 billion, up from $5.7 billion a year ago.