Monday, February 14, 2011

Campbell Soup Co. (NYSE: CPB): Q2 Earnings Preview

Campbell Soup Co. (NYSE: CPB), the world's largest soup company, is scheduled to release its fiscal second-quarter earnings before the opening bell on Friday, February 18, 2011. Analysts, on average, expect the company to report earnings of 72 cents per share on revenue of $2.15 billion. In the year ago period, the company reported earnings of 74 cents cents per share on revenue of $2.15 billion.

Campbell Soup Company, together with its subsidiaries, engages in the manufacture and marketing of branded convenience food products worldwide. The Company operates in four segments: U.S. Soup, Sauces and Beverages; Baking and Snacking; International Soup, Sauces and Beverages, and North America Foodservice. 

In the preceding fiscal-first quarter, the Camden, New Jersey-based company's net income was $279 million, or 82 cents a share, compared with a profit of $304 million, or 87 cents, in the year-ago quarter. Revenue slipped 1% to $2.17 billion from $2.2 billion. Analysts, on average, expected the company to report earnings of 83 cents per share on revenue of $2.20 billion. 

At its last earnings call in November, Campbell said that it continues to expect fiscal 2011 net sales growth of 1 to 3 percent, EBIT comparable to the adjusted EBIT in the prior year and EPS growth of 2 to 4 percent from the fiscal 2010 adjusted base of $2.47.

Last month, the company announced that it would form a joint venture with Swire Pacific Ltd to expand the reach of its business in China. Campbell will own 60 percent of the Campbell Swire joint venture. Campbell started selling soup in China in 2007 but has been looking for ways to expand the business in the world's most populous country, where most people still eat homemade soup. The company sees the Chinese market as fertile ground for expansion. Campbell and Swire said about 355 billion servings of soup are consumed in China annually. But most of those servings are of homemade soup, and the challenge is to persuade consumers to buy packaged soup.

Also n January, Campbell announced that had it entered an agreement with British dry food manufacturer Symington's to launch a range of Campbell's-branded dry soups and pasta, and rice meals in the United Kingdom.

The processed and packaged goods sector is currently struggling through a balancing act between price-hikes and ceding market share to store-brands. As commodity prices surge, food makers are forced to either watch their margins shrink or attempt to pass the prices on to their consumers

Food industry experts believe soup has been losing out to other meals that are just as simple to prepare, such as macaroni and cheese and frozen pizza. In November, company executives told investors they expect to see pressure on Campbell's profit margins from continued discounting in the fiscal second quarter. To counter that, the company said it would shift more resources to advertising from promotions.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire