Saturday, May 22, 2010

Campbell Soup Co.(NYSE: CPB): Q3 Earnings Preview

Campbell Soup Co.(NYSE: CPB), the world's largest soupmaker, is scheduled to release its fiscal third-quarter 2010 financial results before the opening bell on Monday, May 25, 2010. Analysts, on average, expect the company to report earnings of 51 cents a share on revenue of $1.80 billion. In the year ago period, the company posted earnings of 48 cents per share on revenue of $1.69 billion.

Campbell Soup Company, together with its subsidiaries, engages in the manufacture and marketing of branded convenience food products worldwide. The company operates through four segments: U.S. Soup, Sauces, and Beverages; Baking and Snacking; International Soup, Sauces, and Beverages; and North America Foodservice. With a 69 percent share of the U.S. wet soup market, Campbell sells almost three billion cans of soup every year.

In the preceding fiscal-second quarter, the Camden, New Jersey-based company reported net earnings of $259 million or $0.74 per share for the second quarter, higher than $233 million or $0.64 per share in the prior-year quarter. Revenue declined 2% to $2.20 billion from $2.25 billion in the previous year. Earnings from continuing operations for the quarter rose to $259 million or $0.74 per share from $229 million or $0.63 per share in the year-ago quarter. Revenue increased 1% to $2.15 billion from $2.12 billion in the same quarter last year. Analysts, on average, expected the company to post earnings of $0.74 per share on revenue of $2.23 billion. Gross margin percentage also grew 70 basis points to 40.5% from last year's 39.8%.

For fiscal 2010, Campbell Soup expects to report adjusted earnings per share year-over-year growth forecast in the range of 9% to 11% from the fiscal 2009 adjusted base of $2.21, implying earnings in the range of $2.41 to $2.45 per share. The company anticipates revenue growth guidance in the range of 2.5% to 3.5%. The growth forecast implies revenues between $7.78 billion and $7.85 billion.

The company plans to enhance more than 60% of its condensed line with product improvements, further expand its sodium reduction program, introduce more contemporary packaging, improve shelving systems and new marketing aimed at the simple meals category. The new and improved soups will be available at retail in August 2010. The moves are part of the company's effort to maintain its dominant position in the soup market and regain market share from rivals like General Mills Inc.'s Progresso and ConAgra Foods Inc.'s Healthy Choice. The company continued to grow in the economic downturn by focusing on the health trend, capitalizing on the rise in packed lunch occasions, and preparing to build its business in emerging markets. Like other packaged foods companies, Campbell Soup has benefited as consumers saved money by eating at home more often.

In terms of stock performance, Campbell Soup shares have gained more than 30 percent over the past year.

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