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Campbell Soup profit rises amid turnaround push

SHARE Campbell Soup profit rises amid turnaround push

NEW YORK — Campbell Soup is preparing to flood supermarket shelves with dozens of new products, but the push to revive its mainstay soup business comes at a time when cautious consumers are spending less on groceries.

The Camden, N.J.-based company, which also makes Pepperidge Farm cookies and V8 juices, plans to introduce 50 new soups and sauces in flavors such as Moroccan chicken and Coconut curry in trendy new packaging in the year ahead.

Still, the company said Tuesday that it expects organic growth to be flat to up 2 percent for its fiscal 2013. The forecast doesn't include its recent acquisition of Bolthouse Farms, which is intended to position the company in the faster-growing premium juice market. Organic growth generally refers to growth from existing rather than newly-acquired businesses.

When including Bolthouse, the company expects net sales to increase 10 percent to 12 percent.

For its fiscal fourth quarter, Campbell said its soup sales rose 9 percent — after falling 9 percent in the year-ago period — as retailers ran promotions and stocked up on inventories of its condensed soups, such as chicken noodle and tomato. A 5 percent price hike also contributed to growth.

It was the first sales increase for the unit in more than two years and the biggest gain since the first quarter of 2009.

Campbell's overall market share of soups nevertheless fell 2.9 percent in the period, according to SymphonyIRI. Other brands collectively saw a 10 percent share increase in terms of dollars, while store-brand varieties enjoyed a 2.1 percent increase.

The company also noted in a conference call with investors that recent price increases could hurt soup volumes in the months ahead.

As for the new soups and sauces that have started shipping to retailers, CEO Denise Morrison said the company should have a better read on how they'll fare after the fiscal first quarter.

"The retailer acceptance has been largely positive, and we look forward to the consumer response," she said.

The company issued a better-than-expected outlook for its fiscal 2013, but warned that it still faces a challenging economic environment and emphasized that it was taking longer than expected to return to its long-term growth targets.

"The consumer continues to be cautious and that is not likely to change in the near future," Morrison said.

Campbell Soup Co. said it earned $127 million, or 40 cents per share, for the period ended July 29. In the year ago period — when the company was weighed down by restructuring charges — it earned $100 million, or 31 cents per share.

Stripping out acquisition-related costs in the latest quarter, earnings were 41 cents per share. Analysts surveyed by FactSet expected 39 cents per share.

Revenue was basically flat at $1.61 billion, but beat Wall Street's $1.59 billion estimate.

Sales of simple meals — which include sauces, soup and broths — rose 7 percent in the U.S. during the quarter.

Condensed soup sales rose 14 percent and broth sales climbed 4 percent. Sales of ready-to-serve soups edged up 1 percent, with sales of "Chunky" soups up slightly.

Its new "Slow Kettle" soups also contributed to growth, although the company did not give specifics.

Gross margin declined mostly because of higher costs and increased promotional spending, which were somewhat offset by higher selling prices and productivity improvements.

Sales of sauces rose 4 percent in the U.S. on improved sales of Prego pasta sauces and Pace Mexican sauces. Sales for U.S. beverages climbed 3 percent, led by increased sales of "V8 Splash" and better sales of "V8 V-Fusion."

The global baking and snacking segment reported a 1 percent decline in sales, with sales of frozen products falling. Sales of Pepperidge Farm products and Goldfish snack crackers were strong.

North American foodservices sales dropped 3 percent, while sales of international simple meals and beverages fell 7 percent partly because of unfavorable foreign exchange rates.

For the full year, Campbell earned $774 million, or $2.41 per share, down from $805 million, or $2.42 per share, in the previous year. Annual revenue dipped slightly to $7.71 billion from $7.72 billion.

For fiscal 2013, Campbell foresees adjusted earnings of $2.51 to $2.57 per share. Revenue is expected to climb 10 percent to 12 percent, implying a range of $8.48 billion to $8.64 billion.

Wall Street expects earnings of $2.52 per share on revenue of $8.47 billion.

The company's shares rose 7 cents to $35.20 in midday trading after rising as high as $36.28 earlier in the session, their highest level since November 2010.