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Campbell 3Q on target
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May 16, 2001: 11:19 a.m. ET
Soup maker's profit fell from year ago but met Wall Street forecasts
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NEW YORK (CNNfn) - Campbell Soup Inc. reported a 6 percent drop in fiscal third-quarter earnings per share Wednesday and a 12 percent drop in net earnings, yet matched Wall Street's lowered expectations as U.S. soup business volume increased.
The world's biggest soup maker also said it anticipates full-year earnings within the range of analysts' estimates, but that it could fall short. Campbell projects earnings per share between $1.60 and $1.64. Analysts on average expect earnings of $1.64 a share.
For the quarter ended April 29, Camden, N.J.-based Campbell (CPB: unchanged at $29.95, Research, Estimates), which also makes Pepperidge Farm cookies, Godiva chocolates, V-8 vegetable juice and Prego pasta sauce, reported net earnings of $122 million, or 30 cents a share, down from $139 million, or 32 cents a share, a year earlier. Analysts polled by earnings tracker First Call anticipated 30 cents a share.
Net sales increased 3 percent to $1.43 billion from $1.39 billion a year ago.
Campbell's CEO Doug Conant attributed a 12 percent rise in domestic soup sales to ramped-up marketing initiatives in the quarter. But those increased marketing costs are also what cut into earnings.
"We are encouraged by our year-to-date business performance, especially with the increase of consumer purchases of soup in the U.S.," Conant said. "Our current market share in performance in our U.S. soup business is unacceptable, and over time we must improve it. We know that winning in the marketplace and regaining investor confidence will require continued sustained investment across our portfolio to drive consistent top and bottom line results in the future."
The company completed the acquisition of Unilever PLC's soup and sauces brands in Europe, which Conant said is an important part of building Campbell's global soup presence.
Campbell's has been struggling with North American soup sales of late, continually losing market share because it wasn't aggressive enough with marketing initiatives.
On April 16, the company said it planned to split its soup business from its beverage and sauce business in hopes of driving North American soup sales.
Then, in February, the company warned it would miss third-quarter estimates as a result of the increased marketing and advertising spending. The news came as Campbell beat second-quarter earnings by a penny a share.
A 7 percent increase in U.S. soup shipments contributed to the worldwide wet soup shipment increase of 8 percent in the quarter.
Wet soup shipments increased 9 percent outside the United States, particularly in Europe, Canada and Australia.
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Sales of Pace sauces and Franco-American pastas also increased in the quarter as a result of increased advertising.
Sales in the biscuits and confectionery business increased 4 percent to $363 million including the negative impact of currency transactions. Sales increased 10 percent excluding the currency impact. Operating earnings in the unit increased 9 percent including negative currency impacts and 14 percent to $46 million excluding the impact. 
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