Campbell Soup Trims 2014 Outlook As Q1 Results Miss Estimates

(RTTNews) - World's largest soup maker Campbell Soup Co. (CPB) reported Tuesday a profit for the first quarter that declined 30 percent from last year, reflecting lower gross margins and a sales decline. Adjusted earnings per share from continuing operations and quarterly sales missed analysts' expectations. The company also trimmed its earnings and sales guidance for full-year 2014.

"While we anticipated a challenging first quarter, the impact from retailer inventory movements was greater than anticipated and accounted for more than half of the decline in organic sales. This was most acute in U.S. Soup, where retailer inventory movements lowered sales by approximately 4 percent, or two-thirds of the decline versus prior year," President and CEO Denise Morrison said.

The Camden, New Jersey-based maker of ready-to-serve soups, pastas and sauces reported net income of $172 million or $0.54 per share for the first quarter, lower than $245 million or $0.78 per share in the prior-year quarter.

Earnings from continuing operations for the quarter declined to $180 million or $0.57 per share from $230 million or $0.73 per share last year.

Excluding items, adjusted net earnings from continuing operations for the quarter was $209 million or $0.66 per share, compared to $266 million or $0.84 per share in the year-ago quarter.

On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.87 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter decreased 2 percent to $2.17 billion from $2.21 billion in the same quarter last year, and missed twelve Wall Street analysts' consensus estimate of $2.29 billion. Organic sales also declined 4 percent.

U.S. simple meals sales decreased 4 percent, while global baking and snacking sales increased 6 percent from last year. Sales at U.S. beverages decreased 8 percent, as well as international simple meals and beverages sales declined 13 percent, while Bolthouse and Foodservice sales were up 2 percent from a year ago.

Gross margin for the quarter contracted 130 basis points to 35.9 percent from last year's 37.2 percent, due to the impact of acquisitions, the Plum Organics recall and unfavorable mix.

"I'm disappointed in Campbell's first-quarter performance. We are confident in our plans to improve our performance in the remaining three quarters. Given our slow start to the year, we are lowering our fiscal 2014 guidance," Morrison added.

Looking ahead to fiscal 2014, Campbell Soup now expects adjusted earnings to grow 2 to 4 percent to $2.53 to $2.58 per share, down from the prior growth forecast of 3 to 5 percent, on projected sales growth of 4 to 5 percent, down from the previous projection of 5 to 6 percent, all on a continuing operations basis. Street is currently looking for full-year 2014 earnings of $2.59 per share on annual revenues of $8.47 billion.

For the second quarter, Morrison said, "As we stated in August, this year's late Thanksgiving holiday is pushing shipments into the second quarter. We expect holiday timing to have a positive impact on our second-quarter results. The second quarter is off to a solid start, as we are seeing stronger shipments of soup, broth and stuffing."

CPB closed Monday's regular trading session at $41.81, down $0.74 on a volume of 1.85 million shares. In the past 52-week period, the stock has been trading in a range of $34.30 to $48.83.