Campbell Soup 1st-qtr profit beats estimate, shares jump
(Adds analyst comment, background, updates stock action)
By Richa Naidu
CHICAGO, Nov 20 (Reuters) - Campbell Soup Co on
Tuesday reported a smaller-than-expected decline in quarterly
earnings, boosting shares of the soup maker a week before its
proxy showdown with hedge fund Third Point LLC.
Campbell shares, which have lost nearly one-third in value
over the past two years, jumped more than 5 percent.
"The stock should go higher today because the company met
its very low expectations for the quarter," Credit Suisse
analyst Robert Moskow said. "The results in the quarter
certainly don't look good from an objective standpoint."
Net earnings attributable to the company fell to $194
million, or 64 cents per share, in the first quarter ended Oct.
28, from $275 million, or 91 cents, a year earlier. Organic
sales, which do not include revenue from recent acquisitions,
fell 3 percent.
The 149-year-old company, which has struggled for years to
attract young consumers to its namesake soups and Pepperidge
Farm cookies, launched a cost-cutting and divestment plan at the
end of August.
Camden, New Jersey-based Campbell has been embroiled in a
bitter proxy fight with billionaire Daniel Loeb's Third Point
hedge fund since September. Loeb has campaigned aggressively to
replace some board members. Investors are scheduled to vote on
Campbell directors at an annual meeting on Nov. 29.
"We are open to a solution (with Third Point) that makes
sense and doesn't compromise our ability to deliver the plan,"
interim Chief Executive Officer Keith McLoughlin told Reuters.
McLoughlin, who has been a Campbell board member since
2016, was tapped to fill in temporarily when CEO Denise Morrison
unexpectedly stepped down in May. The company, which reported
weak corporate earnings for years under Morrison, has said it
will name a new CEO before the end of the year.
Campbell, which also owns the Prego pasta sauce and Goldfish
cracker brands, said it has begun the process of divesting its
international and fresh food businesses.
The company said the units, which were put up for sale in
August, have attracted strong interest from potential buyers.
Excluding items, the company earned 79 cents a share in the
first quarter ended Oct. 28, beating the average analyst
estimate of 70 cents, according to Refinitiv data.
"We're getting traction in our soup business, integrating in
Snyder's-Lance. Divestitures are well underway. We're driving
out costs," McLoughlin said in the interview.
Earnings were hurt by "significantly" higher costs for steel
and aluminum as well as a rise in freight and logistics
expenses, McLoughlin added. Costs for butter, wheat and grains
also were up.
Campbell, which uses steel and aluminum to make its soup
cans, said some of the inflation has been exacerbated by global
trade tensions that have hurt profits across the consumer goods
Start-up problems at a new distribution facility in Findlay,
Ohio, also cut into earnings. McLoughlin said the problems had
not continued into the second quarter.
The stock was up 5.7 percent to $40.66.
(Reporting by Richa Naidu
Editing by Nick Zieminski and Jeffrey Benkoe)
First Published: 2018-11-20 14:51:28
Updated 2018-11-20 17:02:16
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