Campbell’s Q1 results bolstered by strong snacks sales
The Camden, New Jersey-based firm recorded net sales of $2.67bn, driven by the recent acquisitions of snack-maker Snyder’s-Lance and broth producer Pacific Foods.
The unit’s sales increased to $1.2bn from $688m in the same period last year, while operating income rose by 32% to $154m. Organic sales were down 1% after a recall of Goldfish crackers.
However, Campbell’s overall operating profit fell 15% to $350m as US soup sales continued to decline.
Profit also declined to $194m compared to $275m a year ago, as the company faced higher costs tied to promotional spending and supply chain expenses.
Earnings before interest and taxes (EBIT) sunk by 15% to $350m for the first quarter ending October 28, 2018.
Earnings per share fell 30% to $0.64.
Ongoing feud
The results come amid an ongoing feud between the company’s board of directors and activist shareholder Third Point LLC, which wants to replace five members with its own candidates. Third Point’s Dan Loeb has also called for an outright sale to remedy years of underperformance.
The company, however, has dismissed this, announcing it would pursue the divestiture of its Campbell Fresh and Campbell International units in order to optimize its operations.
Keith McLoughlin, Campbell’s interim president and CEO – who has led the company since the abrupt departure of Denise Morrison in May – told analysts on a conference call that the company is on track with its plans.
“We remain focused on executing our strategic initiatives and confident that our go-forward plan will drive long-term organic growth and profitability that maximises value for all shareholders,” he said, conceding that “there is much more work to be done and it will take time to stabilize our business.”
A stockholder vote will resolve the conflict at Campbell Soup’s AGM on November 29.
Campbell’s CFO Anthony DiSilvestro confirmed the company is on track to achieve fiscal year goals.
