By Geoff Mulvihill
Associated Press Writer
MOUNT LAUREL, N.J. (AP) — The Campbell Soup Co. said Monday that its second-quarter profit dropped 15 percent as its main U.S. soup division did well but business slowed in other divisions and it was hurt by the stronger dollar.
The Camden-based company said it earned $233 million, or 64 cents per share, for the three months ended Feb. 1. That's down from $274 million, or 71 cents per share, in the same period a year ago.
Excluding one-time items due to restructuring, taxes and the company's sale of the Godiva Chocolatier business, the company earned $234 million, or 65 cents per share — down 23 percent from $266 million or 69 cents per share a year ago.
On that basis, Campbell's performance was a penny per share higher than the consensus expectation of analysts surveyed by Thomson Reuters.
The company said its profits were hurt by the strengthening dollar and pushed down further by higher advertising and promotional spending.
Sales for the quarter came to $2.12 billion, down about 4 percent from last year's second quarter mark of $2.22 billion.
Campbell's core business, U.S. soup, saw profits up 3 percent. Other divisions, such as baked and snack goods and international soup, sauces and beverages, saw slower growth or decreases. Food service sales were also down as more people turn to eating at home.
Some products in those other divisions sold well, though. Pepperidge Farm Goldfish crackers had double-digit gains.
The company has long said that it would not be bruised by a recession as much as some businesses — after all, its main product is an affordable meal option. President and CEO Douglas R. Conant said in a statement Monday that is still the case.
"Campbell remains well-positioned during this economic downturn due to the focused and high-value nature of our portfolio, the relative vitality of the categories in which we compete and our position within those categories," he said.
But Campbell also said that major retailers have been cutting back on their inventory, a trend that other foodmakers have noted recently. The company said that especially hurt its Prego pasta sauces and Pace Mexican sauces, where it did not benefit much from higher consumer sales.
For the first six months of its fiscal year, the company earned $493 million, or $1.35 per share on sales of $4.37 billion. All those figures were down from the first half of the previous year, when earnings were $544 million, or $1.41 per share, on sales of $4.40 billion.
Campbell says it is maintaining its projection of 3 percent to 4 percent sales growth for the fiscal year and expects its profits for the year to be at the high end of the previously projected 5 percent to 7 percent growth range.
Shares in the company fell 36 cents to $29.09 on Monday, near the lower end of its range over the past 52 weeks, when it has sold for between $27.35 and $40.85.
Jack Russo, who follows Campbell for Edward Jones, said the declines are due mostly to a poor overall economy.
"These companies, their results get hit back a little bit, too," he said.