Campbell Soup’s year-on-year reported net sales increased 25% in its first-quarter, thanks in part to the strong performance of its biscuits and snacks division.
Campbell’s recorded net sales of $2.67 billion, reflecting a 29-point benefit driven by the recent acquisitions of Snyder’s-Lance and Pacific Foods and a 77% rise in sales across the company’s Global Biscuits and Snacks unit.
The unit includes brands such as Pepperidge Farm cookies and Snyder’s-Lance pretzels, and sales increased to $1.2 billion from $688 million in the same period last year. The unit’s operating income increased 32% to $154 million.
However, the company’ overall operating profit for the segment fell 15% to $350 million as US soup sales continued to decline, as ready-to-serve soups and condensed soup sales fell 6% in the three months ending 28 October 2018.
The results come amid an ongoing feud between the company’s board and investment group Third Point, led by activist investor Dan Loeb. Third Point owns a minority stake in Campbell’s, and has called for a board overhaul and the possibility of an outright sale to remedy years of underperformance.
During the quarter, the company announced that it would pursue the divestiture of its Campbell Fresh and Campbell International units in order to optimise its operations, suggesting that it would not seek an outright sale.
Keith McLoughlin, Campbell’s interim president and CEO said: “We are on track with our plans and are encouraged by the progress we are making against the significant actions we announced on August 30th to simplify, focus and optimise our portfolio.
“Through considerable cross-functional efforts in October, we were able to overcome the supply chain challenges that we faced early in the quarter and deliver results that enabled us to reaffirm our fiscal 2019 guidance.
“As we focus Campbell on our Snacks and Meals and Beverages businesses in our core North American market, we are driving increased operating discipline across the company.
“During the quarter we started to see improved trends in US soup, a return to sales growth in our V8 business, and continued solid performance in Campbell Snacks.
“We continue to expect fiscal 2019 to be a transition year as we fully operationalize our plans to turn around Campbell.
“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.”
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