Weakness in the soup business was mitigated by strength in the company's Pepperidge Farm cookie and cracker business and V8 juice line.
CHICAGO (Reuters) - Campbell Soup Co <CPB.N> posted a 7 percent decline in first-quarter profit on Monday, hurt by higher costs and lower U.S. soup sales, but stood by its full-year earnings forecast.
Weakness in the soup business was mitigated by strength in the company's Pepperidge Farm cookie and cracker business and V8 juice line.
"The soup business was weak and you don't like to see it, but it was offset by some great performance elsewhere," Matt Arnold, analyst at Edward Jones, said. "V8 continues to do very well; Pepperidge Farm continues to do very well."
U.S. soup sales were held down by an exceptionally warm autumn, but Campbell said it expects the business to "deliver better performance as the (fiscal) year progresses."
!ADVERTISEMENT!The first quarter is typically the start of "soup season" for Campbell, when retailers begin stocking up for the cooler fall and winter months.
Campbell shares, which had fallen more than 4 percent in the week-and-a-half before earnings were, were up slightly on Monday on the New York Stock Exchange.
The largest U.S. soup maker said net earnings were $270 million, or 70 cents a share, in the fiscal first quarter ended October 28, down from $291 million, or 72 cents a share, a year earlier.
Analysts on average were expecting 71 cents per share, according to Reuters Estimates.
The company said gross margins were hurt, as it spent more on advertising and marketing and its price increases were not enough to offset higher costs for ingredients, especially wheat, which is used in both the baking business and as a thickener in some soups.
Net sales rose 7 percent to $2.30 billion, aided by greater sales volume, a higher proportion of sales of more expensive products, and the weak U.S. dollar, which boosted the value of overseas sales.
Sales of Campbell's U.S. soup, sauces and beverages business, which accounted for nearly half of total sales, posted a 4 percent rise, as higher sales of V8 beverages and Prego pasta sauces helped offset a 1 percent decline in soup sales.
Gains in Mexico, Canada, the Asia-Pacific region, Belgium and France helped the international soup, sauces and beverages business post a 12 percent sales rise in the first quarter, to $389 million.
Sales in the baking and snacking division, which includes Pepperidge Farm cookies and crackers, rose 10 percent to $532 million.
Campbell stood by its profit forecast for fiscal 2008, saying it still expects earnings per share from continuing operations to grow 5 to 7 percent from fiscal 2007's $1.95.
The company has been boosting sales with newer products like lower-sodium soup, while also expanding its soup business into China and Russia.
It said in August it was exploring options for its Godiva Chocolatier business that could lead to a sale of the upscale brand.
Campbell shares, which trade at nearly 17 times estimated fiscal 2008 earnings, were up 11 cents at $35.37 in afternoon trade on the New York Stock Exchange after reaching as high as $36.44.
(Reporting by Brad Dorfman and Martinne Geller; Editing by Gerald E. McCormick)
