Campbell Soup “Unsatisfied” With Quarterly Results and Wants to Bring More “Excitement” to Portfolio

23 May 2016 --- Campbell Soup said it was "unsatisfied" with its third quarter results, citing below par US soup sales, "challenges" for its vegetable juice brand, and a disruption to its carrot supply, as undermining its performance.

Profits were up in the third quarter to May 2016 from $179m to $185 over the year at the biggest soup company in the US, but sales dropped from $1.9bn to $1.87bn, which was below forecasts.

Denise Morrison, Campbell’s chief executive, said: “Despite what continues to be a very challenging consumer environment, Campbell remains focused on becoming a leaner, more effective and efficient company. We’re unsatisfied with our third-quarter organic sales growth, which was largely due to a weaker US. soup season, some challenges in V8 beverages and a weather-related disruption to our fresh carrot supply.”

"Importantly, we understand the factors affecting our top-line performance and are addressing them. Year-to-date organic sales are down slightly. We expect organic sales to grow in the fourth quarter and next fiscal year, behind more robust innovation and marketing."

“Third-quarter adjusted EBIT (earnings before interest and tax) declined, but was better than expected. Our year-to-date adjusted EBIT (earnings before interest and tax) increase of 15 percent reflects our improved gross margin performance and the benefits of our three-year cost savings program and organization redesign."

“Today we updated our guidance, raising our outlook for adjusted EPS earnings per share). We continue to stay focused on driving sustainable, profitable net sales growth and creating shareholder value.”

Its shares, which have been up over 10 percent this year, dropped over six percent to $59.90 after the results were announced.

In the quarter, Campbell's largest division, Americas Simple Meals and Beverage, saw sales fall three percent to $999m.

US soup sales were down five percent driven by declines in ready-to-serve and condensed soups, partly offset by gains in broth.

A high point across the division was sales gains in Prego pasta sauce and plum products.

Across its global biscuits and snacks division, sales were down two percent in the quarter to $608m.

There was a sales decline in Kelsen, which was partially offset by gains in Pepperidge Farm Goldfish crackers, and soups and beverages in Australia.

Across its Campbell Fresh segment, sales were up six percent to $263m. Excluding the impact from the acquisition of Garden Fresh Gourmet, sales declined four percent reflecting lower sales in carrots, partly offset by gains in Bolthouse Farms premium refrigerated beverages and salad dressings.

According to the Wall Street Journal, Ms Morrison said the company needs to bring more "excitement" to its core products, during a conference call.

Campbell Soup has tried to keep up with changing consumer tastes through acquisitions.

Earlier this year, it announced a $125m investment as part of a venture-capital project to fund food start-ups.