Campbell Soup (CPB) Tops Q2 EPS by 1c; Guides FY15 EPS Below Expectations

Campbell Soup (NYSE: CPB) reported Q2 EPS of $0.66, $0.01 better than the analyst estimate of $0.65. Revenue for the quarter came in at $2.23 billion versus the consensus estimate of $2.23 billion.

Campbell’s President and Chief Executive Officer Denise Morrison said, “Our second-quarter organic sales were comparable to the year-ago period. Adjusted EBIT declined by double digits, reflecting disappointing gross margin performance in the quarter, and was below our expectations. Looking at the first half, we were encouraged by our 2 percent organic sales growth in a difficult operating environment. For the half, four of our five reporting segments achieved organic sales growth.

“Although we have robust plans in the second half to mitigate our gross margin issues, we don’t expect to offset the impact of the margin pressures that we experienced in the first half. Given our second-quarter performance and outlook for the remainder of the year, we lowered our full-year guidance on Feb. 12.

“Over the last three years, we’ve made solid progress advancing our dual mandate to strengthen the core business and at the same time expand into faster growing spaces; however, it has not been enough in this more challenged environment. After several months of careful study, we’ve announced a significant reorganization of our company creating three new divisions, each with clear portfolio roles. This new enterprise structure will enable us to allocate more resources to the areas that present the greatest growth opportunities and fund our growth with significant cost savings. We expect to generate annual cost savings of at least $200 million over a three-year period using a zero-based budgeting approach. We don’t anticipate significant savings from these efforts in the current fiscal year, but are confident that the important steps we are taking will unlock potential value over time.”

The comapny sees FY15 EPS of $2.32 to $2.38, with the consensus at $2.39.

For earnings history and earnings-related data on Campbell Soup (CPB) click here.

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