CAMDEN, N.J. - The Campbell Soup Co. said Friday its second-quarter profit slipped 3.9 percent as increases in the cost of commodities and energy and higher promotional spending offset a strong sales increase.
The company has been offering fewer promotional discounts and plans to raise prices for most of its products for the rest of the fiscal year — especially in the summer.
Retail prices of soup, sauces and beverages in the United States, for instance, will be raised by an average of 5 percent in coming months, company officials told analysts on a conference call Friday.
Campbell's said that will help offset the expected 6 percent to 7 percent increase this fiscal year in the cost of ingredients.
Overall, the world's largest soupmaker said it earned $274 million, or 71 cents per share, for the three months ended Jan. 27. That was down from $285 million, or 72 cents a share, a year ago. Sales climbed 7.4 percent to $2.22 billion from $2.06 billion a year earlier.
Excluding profit from discontinued operations, earnings were $260 million, or 67 cents per share, up from $257 million a year ago. The discontinued operations include the company's Godiva Chocolatier unit, which is being sold to Yildiz Holding AS.
Campbell shares jumped $2, or 6.4 percent, to $33.51 in afternoon trading Friday. They had been trading near their lowest level of the past 12 months before that.
Matt Arnold, an analyst with Edward Jones, said the stock surge was surprising for a company that in the last few quarters has not been able to grow sales of its condensed and ready-to-serve soups at the same time.
He said investors might be reacting largely to the company saying it still expects profits for all of fiscal 2008 to be up 5 to 7 percent.
"It's almost a relief that they didn't lower guidance," Arnold said.
The company said sales of its condensed soup, which have been revitalized in the last few years after a long, slow decline, slipped 1 percent. But ready-to-serve soup sales were up 8 percent, despite a decline of sales in soup sold in microwavable bowls.
Lower-sodium soups have done well, the company said, as have V8 juices and Pace Mexican sauces and its Pepperidge Farm brand cookies and crackers.
In the first six months of the fiscal year, Campbell's earned $544 million, or $1.41 per share, down from $576 million, or $1.44 per share, a year earlier. But six-month sales rose 7 percent to $4.4 billion from the same period a year earlier.
Campbell President and CEO Douglas R. Conant said a downturn in the overall economy should not hurt the company.
"This is the perfect recession food," he said.
On the Net: http://www.campbellsoup.com