High-quality foods and simple meals manufacturer,
Campbell Soup Company
) reported robust third-quarter 2013 financial results. Quarterly
adjusted earnings per share increased approximately 11% year over
year to 62 cents and surpassed the Zacks Consensus Estimate of 56
Net sales increased 15% to $2,094 million from $1,821 million
in the prior-year quarter. Moreover, it came ahead the Zacks
Consensus Estimate of $2,040 million. During the quarter,
Bolthouse Farms contributed 11%, volume and mix added 5%, and
price and sales allowances contributed 1% to overall sales
growth. However, these were partially offset by the negative
impact of the 2% increase in promotional spending.
Adjusted gross margin of 36.7% declined 210 basis points from
the prior-year quarter level of 38.8%, mainly due to the
acquisition of Bolthouse Farms, which has a low gross margin
structure. However, in dollar terms, adjusted gross profit rose
9% year over year to $768 million.
In the reported quarter, marketing and selling expenses inched
up 2% to $262 million. This was primarily due to higher
innovation related costs, escalated selling expenses and expenses
related to Bolthouse Farms, which were counterbalanced by reduced
advertising and promotional expenses.
Adjusted operating income rose 9% to $293 million compared
with $268 million in the prior-year quarter, attributed to
improved sales and gross profit, partly offset by elevated
selling expenses and administrative costs. However, adjusted
operating margin contracted 70 basis points to 14.0% from 14.7%
reported in the previous-year period.
U.S. Simple Meals:
Third-quarter sales at this division increased 11% year over year
to $627 million. This was mainly due to an 11% rise in volume and
mix, and a 2% improvement in price and sales allowances. However,
this was partially offset by the negative impact of a 2% rise in
promotional spending. Sales of U.S. Soup grew 14% as sales of
ready-to-serve soups grew 18% and condensed soups increased 11%,
while sales of broth surged 18%. Sales of U.S. Sauces increased
3% compared with the year-ago quarter.
During the quarter, operating income grew 30% to $156 million
compared with $120 million in the year-ago quarter, primarily
driven increased volumes, productivity improvements and higher
selling prices, partially offset by higher promotional
Sales at this division dipped 5% year over year to $198 million
due to a decline in volume and mix, increased promotional
spending, and lower price and sales allowances. Sales declines in
"V8" vegetable juice led to the fall.
The segment's operating income in the quarter declined 26.7%
to $33 million primarily due to lower volume, increased cost and
higher promotional spending, partially offset by productivity
Global Baking and Snacking:
This segment's sales increased 5% to $568 million. The results
primarily gained from a 5% rise in volume and mix, and 1%
increase in price and sales allowances, offset by the 1% negative
impact of unfavorable currency exchange rates.
Segment operating income remained flat year over year at $73
million, as benefits from increased sales were fully offset by
higher marketing and administrative costs.
International Simple Meals and Beverages:
Sales of this segment inched up 2% to $357 million, primarily due
to a 4% increase in volume and mix, and 1% rise in price and
sales volumes. However, it was partially offset by the negative
impact of 2% from promotional spending and 1% from currency
translation. Region wise, higher sales in Latin America, Europe
and Asia-Pacific were partially offset by a decline in
The segment's operating income of $40 million was up 8.1% from
$37 million in the year-ago period led by the strong performance
Bolthouse and Foodservice:
This segment comprises Bolthouse Farms business, which was
acquired on Aug 6, 2012, and the North America Foodservice
business. This division's quarterly sales were $344 million.
During the quarter, Bolthouse contributed $205 million to
segment sales, while sales at North America Foodservices declined
10%. The decline in North American Foodservice was due to lower
frozen soup sales due to the loss of a major restaurant
Operating income rose by $7 million to $27 million mainly due
to the acquisition of Bolthouse Farms, offset by lower earnings
in North America Foodservice.
Bolstered by better-than-expected quarterly results, Campbell
has raised its fiscal 2013 adjusted earnings per share guidance
range to $2.58-$2.62 from $2.51-$2.57 expected earlier. Further,
the company anticipates that its sales for fiscal 2013 will reach
the higher-end of the previously forecasted range of 10%-12%.
Moreover, adjusted EBIT for fiscal 2013 will likely be at the
higher-end of the company's earlier guidance range of 4%-6%.
Further, in fiscal 2013, Campbell expects Bolthouse Farms to
contribute approximately $750 million to sales and add about 6
cents per share to adjusted earnings.
Currently, Campbell Soup retains Zacks Rank #2 (Buy). Other
stocks performing well in the food space include
H.J. Heinz Co.
J&J Snack Foods Corp.
), all of which hold a Zacks Rank #2 (Buy).
ANNIES INC (BNNY): Free Stock Analysis Report
CAMPBELL SOUP (CPB): Free Stock Analysis
HEINZ (HJ) CO (HNZ): Free Stock Analysis
J&J SNACK FOODS (JJSF): Free Stock Analysis
To read this article on Zacks.com click here.