Campbell Soup Company saw its net sales increase by 14.7% in its third-quarter results, in part thanks to the recent acquisition of snack maker Snyder’s-Lance. However, the company posted a gross earnings loss of $475 million.
In the three months to the end of April 2018, Campbell’s revenue was $2.13 billion as it benefited from the purchase of its soup rival Pacific Foods last year.
In its Americas simple meals and beverages unit – which includes Campbell’s soups, Pacific broth and Prego pasta sauces – sales were up 5% to $1.01 billion.
However, excluding the benefit from the acquisition of Pacific Foods, sales of US soup decreased 1%, driven by declines in condensed soups, partly offset by gains in broth and ready-to-serve soups.
Campbell’s global biscuit and snacks unit – including brands such as Arnott’s Biscuits and Pepperidge Farm baked good – saw a 35% surge in sales to $862 million. Excluding the Snyder’s-Lance deal and the favourable impact of currency translation, organic sales increased 1%, primarily driven by gains in Pepperidge Farm snacks.
Finally, in its Campbell fresh business, sales increased 1% to $251 million primarily driven by gains in refrigerated soup. Segment operating loss was $19 million in the quarter.
Campbell’s CFO Anthony DiSilvestro said: “While our organic sales in the quarter were stable in this difficult environment, our gross margin performance was below our expectations. Based on our third-quarter results and outlook for the balance of the year, we are lowering our fiscal 2018 earnings guidance.
“In the third quarter, we made some progress against our key priorities. We completed the Snyder’s-Lance acquisition, substantially expanding our portfolio in the faster growing snacking categories, and we made some progress in stabilising sales in US soup.
“However, we are not satisfied with our financial results. Our performance has been impacted by both execution-related and external challenges. We are addressing these challenges with renewed urgency. Looking ahead, we will be reviewing all aspects of our strategic plans and portfolio composition.
“We anticipate that our review, which will take several months to complete, will lead to changes designed to improve our operating performance and create long-term shareholder value. We plan to discuss the outcome of this review when we report fourth-quarter and full-year results in late August.”
Last month Campbell’s named Luca Mignini as its new chief operating officer and launched an accelerator programme.
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