Campbell Soup Q1 Results Top Estimates, Trims 2015 Outlook

(RTTNews) - World's largest soup maker Campbell Soup Co. (CPB) reported Tuesday a profit for the first quarter that increased from last year, despite lower gross margins, driven by organic sales growth in four of its five segments, particularly in U.S. simple meals.

Both adjusted earnings per share from continuing operations and quarterly sales topped analysts' expectations. The company also trimmed the low end of the earnings and sales growth guidance for the full-year 2015, citing volatility in foreign currencies.

"We were encouraged by our organic sales growth across most of our portfolio, particularly in U.S. Simple Meals and Global Baking and Snacking. Our U.S. soup performance was driven by a stronger seasonal sell-in and the timing of our quarter end relative to the Thanksgiving holiday," President and CEO Denise Morrison said in a statement.

The Camden, New Jersey-based maker of ready-to-serve soups, pastas and sauces reported net income of $234 million or $0.74 per share for the first quarter, higher than $172 million or $0.54 per share in the prior-year quarter, which included loss from discontinued operations of $0.03 per share.

Excluding items, adjusted net earnings from continuing operations was $234 million or $0.74 per share, compared to $209 million or $0.66 per share in the year-ago quarter.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.72 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter increased 4 percent to $2.26 billion from $2.17 billion in the same quarter last year, and topped twelve Wall Street analysts' consensus estimate of $2.22 billion. Organic net sales grew 5 percent to $2.27 billion.

The company said sales growth was driven by favorable volume and mix, partly offset by increased promotional spending and the negative impact of currency.

U.S. simple meals sales increased 8 percent, as well as global baking and snacking sales improved 3 percent, while sales at U.S. beverages declined 3 percent from last year.

International simple meals and beverages sales decreased 2 percent, while Bolthouse and Foodservice sales were up 4 percent from a year ago.

Gross margin for the quarter contracted 120 basis points to 34.7 percent from last year, due to increased supply chain costs, cost inflation and higher promotional spending, partly offset by productivity improvements.

Looking ahead to fiscal 2015, Campbell Soup now expects adjusted earnings in the range of $2.42 to $2.50 per share on projected sales growth of 0 to 2 percent. Street is currently looking for full-year 2015 earnings of $2.47 per share on annual revenue decline of 0.2 percent to $8.26 billion.

The company's previous guidance was for adjusted earnings in a range $2.45 to $2.50 per share on sales growth of 1 to 2 percent.

The company noted that currency is estimated to have a negative 1-point impact on both reported sales and earnings, or $0.03 per share.

"Although our year is off to a solid start, we are facing some challenges. Our gross margin performance did not meet our expectations due largely to higher than anticipated commodity costs and supply chain costs. We have plans to offset gross margin pressure in the remainder of the year," Morrison added.

CPB closed Monday's regular trading session at $44.59, down $0.32 on a volume of 1.49 million shares. In the past 52-week period, the stock has been trading in a range of $38.37 to $46.67.