Campbell Soup Q2 Profit Tops Estimates; Organic Sales Down 2%; Affirms Guidance
CAMDEN (dpa-AFX) - Campbell Soup Company (CPB) reported that, excluding items, its second-quarter adjusted EPS increased 5 percent to $0.91 per share, compared with $0.87 per share in the year-ago quarter, reflecting lower adjusted tax rate. On average, 13 analysts polled by Thomson Reuters expected the company to report profit per share of $0.88 for the quarter. Analysts' estimates typically exclude special items.
Second-quarter net earnings attributable to Campbell Soup Company was $101 million or $0.33 per share compared to $265 million or $0.85 per share, previous year. The company noted that it recorded pre-tax non-cash impairment charges of $212 million, or $0.58 per share, related to Campbell Fresh Segment. EBIT decreased 50 percent , principally driven by the impairment charges in the current-year quarter. Adjusted EBIT decreased 1 percent reflecting lower sales and higher marketing and selling expenses, partly offset by a higher adjusted gross margin percentage.
Second-quarter sales decreased 1 percent to $2.17 billion driven by the decline in organic sales, partially offset by the favorable impact of currency translation. Organic sales decreased 2 percent driven by lower volume and higher promotional spending. Analysts expected revenue of $2.22 billion for the quarter.
Denise Morrison, Campbell's CEO, said, "I am not satisfied with our sales performance this quarter. Declines were most prominent in Campbell Fresh driven by a market share decline and weather-related issues in carrots, capacity constraints from the Bolthouse Farms Protein PLUS recall last June, and Garden Fresh Gourmet. C-Fresh performance was below our expectations. The new C-Fresh management team has conducted an extensive review of the business and has determined the recovery will take longer to execute than we originally planned. As a result, we no longer expect C-Fresh to grow this fiscal year."
For fiscal 2017, Campbell continues to expect sales to increase by 0 to 1 percent, adjusted EBIT to increase by 1 to 4 percent, and adjusted EPS to increase by 2 to 5 percent, or $3.00 to $3.09 per share. Analysts polled by Thomson Reuters expect the company to report profit per share of $3.08.
In fiscal 2015, Campbell launched a comprehensive reorganization and multi-year cost savings initiatives with targeted annualized cost savings of $300 million by fiscal 2018. Campbell now expects to achieve $300 million in cost savings by the end of fiscal 2017, a year earlier than anticipated. The company said, based on the success of the program to date and the identification of additional savings opportunities, the savings target is being increased from $300 million by the end of fiscal 2018 to $450 million by the end of fiscal 2020.
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