Fitch affirms Campbell ratings, outlook

by Eric Schroeder
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CHICAGO — Fitch Ratings on Nov. 3 affirmed the long-term issuer default rating and senior unsecured debt ratings for Camden, N.J.-based Campbell Soup Co. at “A” and the short-term issuer default rating and commercial paper at “F1.” The company’s outlook was affirmed as “stable.”

In issuing its ratings affirmation, Fitch cited Campbell’s significant cash flow generation, modest leverage and the continuation of its balanced financial strategy.

“The ratings incorporate Campbell’s leading position in the high margin soup category and the strength of its branded product portfolio, which focuses on simple meals, baked snacks and healthy beverages,” Fitch said. “The ratings also consider the mature and highly competitive nature of the soup category, which faced a very difficult year in fiscal 2010. Sales for the U.S. wet soup category declined in fiscal 2010, and Campbell’s sales decline was slightly worse than the category.

“In contrast, private label soup sales increased. Campbell’s U.S. soup sales declined 4% for the fiscal year ended Aug. 1, 2010, versus the prior year. The decline was driven primarily by both canned and microwavable ready-to-serve soups. Campbell’s condensed cooking soup sales increased in fiscal 2010, benefiting from the shift toward eating more meals at home during the prolonged weak economic environment. Fitch expects this trend to continue in the near term while unemployment remains high.”

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