CAMDEN, NJ. — Executives for the Campbell Soup Co. will keep a close watch on how consumers respond to rising prices, but for now that strategy is working for the Camden-based company, which was evident by financial results for the second quarter ended Jan. 29.
Net earnings of $232 million, equal to 78¢ per share on the common stock, were up 9% from $212 million, or 70¢ per share, in the previous year’s second quarter.
“Our teams continue to successfully navigate the inflationary environment, leveraging a number of different tools beyond pricing, such as driving operational efficiencies and productivity improvements,” said Mark A. Clouse, president and chief executive officer, in a March 8 earnings call.
Net sales increased 12% to $2.49 billion from $2.21 billion. Organic sales increased 13% as favorable net price realization was offset partially by volume/mix declines.
“We did experience some limited pockets of volume declines in the quarter, specifically in our Meals & Beverages division and particularly in the last four weeks of the second quarter,” Mr. Clouse said. “These year-over-year declines were primarily due to lapping last year’s significant omicron surge and favorable year-ago winter storm impacts rather than increasing elasticities due to pricing. In fact, overall elasticities remain as we expected and are favorable to historical norms.”
Campbell Soup raised its full-year fiscal 2023 guidance. Organic net sales are expected to increase 8.5% to 10%, up from a previous guidance of 7% to 9%. The company projects adjusted EBITDA to rise 4.5% to 6.5%, up from a previous guidance of 2.5% to 6.5%. Adjusted EPS should be in a range of $2.95 to $3, up 3.5% to 5% from fiscal 2022. The previous guidance was a range of $2.90 to $3, up 2% to 5%.
“Our higher expectation for revenue reflects the strength of our brands with price elasticities remaining favorable to historical norms as well as stronger supply chain execution and sustained marketing investment to fuel demand and support innovation,” said Carrie L. Anderson, chief financial officer.
Net sales within Campbell’s Meals & Beverages division increased 10% in the quarter to $1.41 billion from $1.28 billion. Organic sales rose 11%, primarily due to increases in US retail products, including US Soup, Prego pasta sauces and Pace Mexican sauces, and gains in foodservice. Sales of US Soup rose 7%.
“Our US Soup business, which represents more than half of the wet soup category, grew dollar consumption by 4% in the second quarter despite increasing promotional pressure from private label,” Mr. Clouse said. “Our dollar share did decline by 0.6 points versus prior year as the category overall grew by 6%.”
Chunky Ghost Pepper Chicken Noodle Soup, which ran as a limited-time offering this winter, will return nationwide in the fall. Consumption in Pacific Foods rose 17% in the quarter.
“Pacific Foods also had a very strong quarter, gaining share and momentum, particularly with millennials,” Mr. Clouse said. “Pacific is extremely well-positioned across a variety of categories as a premium organic and healthy brand with offerings in broth, ready-to-serve soups and beverages.”
In the Snacks division, net sales increased 15% to $1.08 billion from $934 million. Organic sales also rose 15% as power brands were up 20%.
“In Q2, we had the strongest share growth in both cookie, cracker and salty snacks among all major branded players, even more impressive as we are among the very few who compete in both of these critical categories,” Mr. Clouse said. “Although benefiting from pricing, we also drove favorable volume mix. One additional important note is the Snacks margin also improved while increasing investment by 19% on marketing and selling.”In the first half companywide, net earnings of $529 million, or $1.77 per share on the common stock, were up 12% from $473 million, or $1.57 per share, in the same time of the previous year. First-half net sales increased 14% to $5.06 billion from $4.45 billion.