Campbell Soup reports 30% drop in Q1 profit

Campbell Soup has reported a 30% decline in net earnings to $172m for the first quarter of 2014, compared with $245m for the same period in 2013, due to weaker consumer demand and a rise in marketing spending.

Net revenues in the quarter ended 27 October 2013 fell 1.8% to $2.17bn from $2.21bn a year ago.

The food maker stated that the impact from retailer inventory movements was greater than anticipated and accounted for more than half of the decline in organic sales.

Campbell president and CEO Denise Morrison said, "We are confident in our plans to improve our performance in the remaining three quarters. Given our slow start to the year, we are lowering our fiscal 2014 guidance."

"Looking ahead, we have plans to drive meaningful growth across the business. We have a robust marketing programme in the second and third quarters at the height of the soup season," added Morrison.

Campbell’s US Simple Meals segment reported a 4% decline in sales to $860m, while operating earnings decreased 23% to $211m.

The decrease in operating earnings was primarily due to lower volumes, higher advertising expenses, expenses related to the Plum Organics recall and increased promotional spending.

The Global Baking and Snacking segment reported a 6% rise in revenues to $609m driven by the acquisition of Kelsen, and price and sales allowances, while operating earnings decreased 8% to $78m due to cost inflation and increased promotional spending.

The International Simple Meals and Beverages segment posted sales of $193m, a 13% drop on year ago, with a 39% decline in operating earnings to $20m.

The US Beverages division saw an 8% drop in sales to $173m and operating earnings of $24m, while sales for Bolthouse and Foodservice were $330m with operating earnings of $29m.

For the full-year 2014, Campbell now expects continuing operations to grow sales by 4% to 5%, EBIT to grow by 4 to 6% and earnings per share by $2.53 to $2.58.