Campbell Soup first-quarter profit up 31 percent on tax benefit |

Campbell Soup first-quarter profit up 31 percent on tax benefit

Associated Press

TRENTON, N.J. – Campbell Soup Co.’s first-quarter profit climbed 31 percent, helped by lower expenses and a large tax benefit, but revenues were flat as sales in the mainstay soup business fell after a strong quarter last year.The world’s biggest soup maker on Monday reported net income of $302 million, or 73 cents per share, for the three months ending Oct. 30 versus $230 million, or 56 cents per share, a year earlier.Excluding one-time items, adjusted earnings were $242 million, or 58 cents per share – 2 cents more than the consensus forecast of analysts surveyed by Thomson Financial. A year ago, adjusted earnings totaled $224 million, or 54 cents per share.Meanwhile, Campbell’s board of directors authorized buying back up to $600 million in stock shares through the end of fiscal 2008.Campbell shares rose $1.27, or 4.3 percent, to close at $30.97 on the New York Stock Exchange, where they have traded in a 52-week range of $26.68 to $31.60.Camden-based Campbell, which also makes Pepperidge Farm snacks and Prego pasta sauces, repeated its earlier forecast that its fiscal 2006 earnings per share, excluding some one-time items, would rise 5 percent to 7 percent over the 2005 level of $1.64 per share.”We’re very bullish about the quarters going forward, that we’re going to be lapping” year-earlier quarters, Chief Executive Officer Douglas R. Conant told analysts during a conference call.Revenues edged up 0.9 percent, to $2.11 billion from $2.09 billion last year.Sales for the biggest business segment, U.S. soups, sauces and beverages, dipped 2 percent to $970 million, despite higher prices. Soup sales were down 6 percent, partly because they had surged in the year-ago quarter due to price discounts and other factors.Condensed soup sales increased 1 percent, after jumping 10 percent the previous year, due to what Campbell termed “more effective advertising,” as well as handy gravity-feed shelving systems now installed in 14,000 grocery stores. Swanson broth sales rose 9 percent and “V8” vegetable juice sales had a double-digit increase.But sales of ready-to-serve soups such as Campbell’s Chunky plunged 17 percent after rising 18 percent a year earlier; Campbell cited higher prices compared to big discounts a year ago, along with discontinuing its Kitchen Classics line.Campbell posted strong growth only in its smallest division, which makes Godiva Chocolates and “Away from Home” products – canned, frozen and refrigerated soups sold to restaurants, cafeterias and convenience stores.”We’re seeing solid growth in both those businesses that I think we can characterize as above-average for the company today and into the foreseeable future,” Conant said.He noted the Godiva business is trying to shift customers from mainly buying chocolate samplers as holiday gifts to buying year-round by offering free samples at their counters. Asked about rumors that Godiva might be sold, Conant said the business has thrived as a part of Campbell since 1966.”You never say never, but there’s nothing on the horizon,” he said.Meanwhile, the baking and snacking division saw sales rise 2 percent to $458 million, and the international soups and sauces division saw sales increase 1 percent to $420 million.The quarter’s results included a non-cash benefit of $47 million, or 14 cents per share, resulting from the favorable resolution of a tax issue related to prior transactions involving government securities.Campbell also took a tax charge of $8 million, or 2 cents, for repatriating $200 million in profits of foreign subsidiaries, offset by a benefit of the same amount for changing its method of accounting for U.S. inventories. Due to rounding, the figures do not add up to the difference between reported and adjusted earnings.Campbell said it cut its interest expense and accrued interest payable by $21 million, and its corporate income tax, at $73 million, was $34 million lower than a year ago.—On the Net:

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