Campbell raises 2010 guidance, Tim Tam sales boost Aussie performance
The Campbell Soup Company has reported profit growth of 17 per cent in the first quarter of Fiscal 2010 despite a two per cent drop in sales.
Douglas Conant, Campbell’s President and Chief Executive Officer, said the company was enthused by the results, which were driven by improved efficiency in the supply chain.
“We feel good about our performance in the first quarter as we delivered solid earnings growth across all of our key businesses,” he advised. “We’re especially pleased with the significant improvement in our gross margin, driven by increased productivity in our supply chain.”
“In this year’s first quarter, we built momentum in the latter part of the quarter when, as planned, we significantly stepped up our marketing and merchandising programs.”
Currency fluctuations turned from headwind to tailwind in the quarter as the American Dollar lost ground, but increased promotional spending and a four per cent fall in volume outweighed the impact of currency.
The US Soup division was the key to the sales decline, struggling to match the remarkable growth of last year. Their baking and snacking division, which includes Arnott’s in Australia, was the best performer, with sales up four per cent and volumes rising one per cent.
“In Australia, sales increased due to the favourable impact of currency and significant growth in Arnott’s, led by higher sales of “Tim Tam” biscuits,” the company advised.
Their International Soup, Sauces and Beverages saw sales fall two per cent, although Australian sales were robust.
“In Asia Pacific, sales increased primarily due to gains in Malaysia, Hong Kong and Australia and the favourable impact of currency,” the company noted in a statement.
Campbell Raises Guidance
Campbell now expects fiscal 2010 sales growth of 4 to 5 per cent and adjusted earnings before interest and taxes (EBIT) growth of 6 to 7 per cent, up from its original guidance of 3 to 4 per cent for sales and 5 to 6 per cent for EBIT.
“While it is early in the fiscal year, we’re raising our guidance based on our results in the quarter and our outlook for the remainder of the year, including currency,” Mr Conant said.