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Campbell’s (NYSE:CPB), a member of the S&P 500, released its fourth quarter and full year results this morning, reporting a 27% increase in earnings during the final quarter. Its share price rose marginally to $36.89 in early trading, continuing its 12% growth for the year. If the price holds throughout the day, it will be a new 52-week high.
Fourth Quarter Results
Sales were relatively flat for the fourth quarter, increasing slightly from $1,607 million to $1,613 million, while pre-tax profits rose from $169 million to $203 million as a result of a 2% reduction in expenses from $1,438 million to $1,410 million.
Earnings-per-share increased by 29% from $0.31 to $0.40.
Full Year Results
Sales for the entire year were down nominally from $7,719 million to $7,707 million. Pre-tax profit declined from $366 million to $342 million. Earnings-per-share declined by $0.01 from $2.44 to $2.43.
Some Perspective
Although Campbell’s results may not seem like something to write home about, still the company beat the market consensus of $0.38 per share earnings on sales of $1,600 million. Overall soup sales, the company’s core product, grew by 9%, helped along by a 14% increase in condensed soup sales. This is probably due to both an increased demand by families during the economic crunch combined with an increase in Campbell’s selling prices. These results were diminished by a 3% increase in promotional expenses, but it is also fair to suggest that the sales increase would not have been nearly as strong without the increased promotional effort and expense. Beverage sales grew by 3% year on year.
Campbell’s is in the midst of a turnaround period during which it is attempting to carve out a bigger portion of the “healthier” foods section of the supermarket shelves. The company recently completed its acquisition of Bolthouse Farms, a natural-foods company, for which it spent $1.55 billion. During the final quarter, Campbell’s was hit by one-time restructuring charges of $10 million.
Salient Comments
“While we’ve had some important accomplishments this year, we also recognize that driving change at Campbell will require a sharper focus on execution. Our strategic framework is a roadmap to drive disciplined and successful change at Campbell. We will continue to enhance and grow our core business, while we broaden our appeal with new consumer groups, new product platforms and new geographies.,” said Denise Morrison, President and CEO.
Morrison’s expectations for FY2013 include sales growth of 10-12% with a 3-5% growth in EPS.
