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Campbell 4Q disappoints
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September 2, 1999: 10:54 a.m. ET
Soup maker misses downwardly revised forecasts by 1 cent a share
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NEW YORK (CNNfn) - Campbell Soup Co. added to a kettle of earnings disappointments Thursday as weakness in its soup division ate away at fiscal fourth-quarter profits.
For the three-month period ended Aug. 1, Campbell posted operating earnings before charges of $121 million, or 28 cents a diluted share, on sales of $1.3 billion. The nation's largest soup maker's results fell below downwardly revised expectations of 29 cents a share, according to a consensus of analysts surveyed by First Call.
The latest quarter results were also lower than the same period a year earlier, when the company reported earnings excluding one-time gains of $173 million, or 38 cents a share, on sales of $1.3 billion.
Wall Street lowered its forecasts after Campbell warned in late June it would miss expectations for the quarter by 8 to 10 cents a share. It blamed a decline in its U.S. soup shipments as retailers continued to reduce inventories.
Including an after-tax $36 million restructuring charge, the company earned $79 million, or 18 cents a share, in the quarter. That's down from the $182 million, or 40 cents a share, in the year- earlier period after figuring in a one-time gain of $9 million.
Before the effects of currency fluctuations and divestitures, the company said sales for the quarter had increased 4 percent.
Soon after the news was announced, shares in Campbell (CPB) spilled 1-1/8 to 43-1/8, well below the 52-week high of 59-15/16.
"Fiscal 1999 has been a difficult year of transition," Campbell President and CEO Dale F. Morrison said in a statement. "These results are disappointing, but the supply chain decisions we made this year will pay dividends in fiscal 2000 and beyond."
When Campbell issued its fourth-quarter earnings warning in June, it said it would consolidate its Canadian soup and sauce division into its U.S. business operations, creating a singular North American division to help combat the downward earnings trend.
Citing a 2 percent increase in U.S. soup consumption during the year, successful test market debuts of new ready-to-serve soups such as "Campbell's Soup-to-Go," and a roll-out of other new products, Morrison said, "We believe our investment in new product development across our portfolio positions us well for the future. Moving forward, we remain committed to delivering long-term shareowner wealth through top quartile earnings growth."
Year-to date
For fiscal 1999, the company posted operating earnings of $766 million, or $1.72 a diluted share, versus $873 million, or $1.90 a share at the end of fiscal 1998, excluding one-time charges, gains and other non-recurring items.
Including those items, the company had net income of $724 million, or $1.63 per diluted share, up from $689 million, or $1.50 a share.
Sales for the fiscal year fell to $6.42 billion from $6.7 billion in 1998.
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Campbell Soup Co.
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