CAMDEN, N.J. — Strength even in the “tough” bread and bun category lifted results for the Global Biscuits and Snacks business of Campbell Soup Co. in the third quarter ended April 28. The division’s strong results factored in a decision by the parent company to raise earnings guidance for the year and helped trigger a surge in its share price.
Operating income of the Global Biscuits and Snacks business was $139 million, up 15% from $121 million in the third quarter last year. Sales were $1,154 million, up 37%.
Excluding the contribution of Snyder’s-Lance, the segment’s operating income was lower than in the third quarter of fiscal 2018 because of cost inflation and rising administrative costs, offset by benefits from supply chain productivity programs. Sales were up 1%, excluding Snyder’s-Lance.
The particular strength of the U.S. baked foods business was highlighted during a June 5 conference call by Anthony P. DiSilvestro, senior vice-president and chief financial officer.
“(The sales gain during the quarter) reflects continued growth in Pepperidge Farm driven by solid consumption gains in fresh bakery products and Goldfish crackers, partly offset by declines in the international biscuits and snacks operating segment,” he said. “Overall, sales performance of the Snyder’s-Lance portfolio was in line with our expectations with solid consumption and market share gains for the first nine months of fiscal 2019.”
Mark A. Clouse, chief executive officer, said the division’s performance was broadly strong, gaining share in 7 of the company’s 10 core brands.
“I continue to be impressed with the proven snacks growth model at Pepperidge Farm,” he said. “This marks the 18th consecutive quarter of organic growth with sales increasing mid-single digits behind strong marketplace performance across all major brands.
“A strong proof point to the capability of the team is the turnaround of a tough fresh bakery business as it continued to generate strong growth behind rolls and buns, the Farmhouse brand and the recent restage of our Swirl line where we improved both the product and the packaging.”
He said the company’s cracker business gained momentum thanks to strong Goldfish sales.
“We continued to gain share driven by base sales growth and the introduction of the new Epic Crunch line,” he said.
He described Snyder’s-Lance results during the quarter as “mixed” but trending positively over the last month, helped by increased advertising spending on the Snyder’s of Hanover, Kettle and Cape Cod brands.
“We continued to deliver strong performance on Late July with consumption increasing by double digits,” Mr. Clouse said. “The snacks team has put in significant work to position these brands for long-term success, including building relevant consumer insights, accelerating ownable renovation and innovation and increasing brand investments. The early signs are encouraging as we activated against these Snyder’s-Lance brands. We expect performance trends on these brands to continue to improve in the fourth quarter as we deploy needed investment and leverage the best of both playbooks from Pepperidge Farm and Snyder’s-Lance.”
Excluding the contribution of Snyder’s-Lance, the Global Biscuits and Snacks segment’s operating income was lower than in the third quarter of fiscal 2018 because of cost inflation and rising administrative costs, offset by benefits from supply chain productivity programs
Net income at Campbell Soup in the third quarter ended April 28 was $131 million, or 44c per share on the common stock, up from $73 million, or 24c per share, in the third quarter last year. Net sales were $2,178 million, up 16% from $1,878 million in the third quarter of fiscal 2018.
Campbell Soup raised its forecast for fiscal 2019 adjusted earnings per share to $2.50 to $2.55 per share, up 2c to 5c from its most recent guidance.
During the quarter, Campbell Soup generated $55 million in savings, including Snyder’s-Lance synergies. Year-to-date savings totaled $150 million, ahead of the company’s original plan of $120 million. The company revised upward its projected cost savings for the year to $180 million in cost savings in fiscal 2019.
Campbell Soup shares in trading June 5 on the New York Stock Exchange closed at $41.93, up $3.60 a share, or 10%. Campbell Soup shares were trading below $33 as recently as February.
In the nine months ended April 28, Campbell Soup net income was $550 million, or $1.83 per share, down 20% from $690 million, or $2.29. Sales were $7,129 million, up 24% from $5,743 million.
For the nine-month period, adjusted EBIT fell 1%, to $1.1 billion, reflecting base business weakness. Adjusted net E.P.S. fell 19%, to $2.13.