Campbell Soup Company has recorded a 1% rise in organic net sales compared to the same time last year driven by its snack unit.
The company’s organic net sales exclude the impact from the sale of its European chips business which it announced in September last year.
Dublin-based Valeo Foods agreed to acquire the business from Campbell, which includes Kettle Foods, for approximately €73 million.
In its second-quarter results, Campbell posted net sales of $2.16 billion comparable to the prior year. During its first quarter, however, the company recorded net sales of $2.18 billion, 1% lower than the year-ago period as US soup sales fell.
In the three months to 26 January 2020, net sales of US soup rose 1% with increases in condensed soups and broth, offset partly by declines in ready-to-serve soups.
Campbell’s meals and beverages unit reported net sales comparable to prior year due to positive performance by its Prego pasta sauces and US soup but partially offset by declines in beverages.
Operating income of segment meals and beverages decreased 4% to $242 million, reportedly due to increased marketing investment and higher administration costs.
In fact, Campbell’s marketing and selling expenses increased 7% to $237 million driven primarily by increased investments in advertising and consumer promotion expenses.
Within its snack unit, meanwhile, net sales decreased 1%, yet operating income rose by 3% to $136 million.
Organic sales in the same division increased 2% driven primarily by gains in Goldfish crackers and Pepperidge Farm cookies, offset partly by declines in fresh bakery products and the partner brands within the Snyder’s-Lance portfolio.
Earlier this week, Campbell appointed Valerie Oswalt as vice-president and president of its snack unit, effective from 9 March 2020 following the stepping down of Carlos Abrams-Rivera.
Mark Clouse, Campbell’s president and CEO, said: “I am pleased that we delivered another high-quality quarter with organic sales, and adjusted gross margin, EBIT and earnings, growing in-line with or above our expectations.
“Additionally, I am very pleased with our successful deleveraging in the quarter, resulting in a much-improved leverage ratio. Given the momentum of the business and lower adjusted interest expense from our debt reduction, we are able to make important incremental investments in the business in the second half while increasing adjusted EPS guidance for the year.”
The company said it is actively monitoring the recent coronavirus outbreak and its potential impact on its supply chain and operations.
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