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Campbell Soup profit rises as soup sales get boost

NEW YORK (AP) -- Campbell Soup on Tuesday reported a stronger-than-expected profit for its fiscal fourth quarter as retailers ran promotions to warm up soup sales and stocked up on inventories.

The Camden, N.J., company also issued a rosier outlook for its fiscal 2013. Its stock edged up in morning trading after briefly touching its highest level in almost two years earlier in the session.

As part of its push to turn around its faltering soup business, Campbell plans to introduce dozens of new soups and sauces this fall aimed at attracting younger consumers, which it refers to as Millennials.

The sales increase in the latest quarter did not shed much light on how those efforts will fare, however, as Campbell attributed the growth in part to retailers running promotions and stocking up on inventories for its traditional condensed soups, such as chicken noodle and tomato. The company said inventory levels at the start of the quarter were lower than they were a year ago.

Campbell Soup Co. said it earned $127 million, or 40 cents per share, for the period ended July 29. In the year ago period — when the company was weighed down by restructuring charges — it earned $100 million, or 31 cents per share.

Stripping out acquisition-related costs in the latest quarter, earnings were 41 cents per share. Analysts surveyed by FactSet expected 39 cents per share.

Revenue was basically flat at $1.61 billion, but beat Wall Street's $1.59 billion estimate.

Sales of simple meals — which include sauces, soup and broths — rose 7 percent in the U.S. during the quarter, with soup sales gaining 9 percent. That marked the first increase since the third quarter of 2010 and the largest increase since the first quarter of 2009.

Condensed soup sales rose 14 percent and broth sales climbed 4 percent. Sales of ready-to-serve soups edged up 1 percent, with sales of "Chunky" soups up slightly.

Its new "Slow Kettle" soups also contributed to growth, although the company did not give specifics. The soups come in containers designed to mimic the take-out cups at fresh soup bars.

Sales of sauces rose 4 percent in the U.S. on improved sales of Prego pasta sauces and Pace Mexican sauces. Sales for U.S. beverages climbed 3 percent, led by increased sales of "V8 Splash" and better sales of "V8 V-Fusion."

The global baking and snacking segment reported a 1 percent decline in sales, with sales of frozen products falling. Sales of Pepperidge Farm products and Goldfish snack crackers were strong.

North American foodservices sales dropped 3 percent, while sales of international simple meals and beverages fell 7 percent partly because of unfavorable foreign exchange rates.

Gross margin declined mostly because of higher costs and increased promotional spending. The company said that this was somewhat offset by higher selling prices and productivity improvements.

For the full year, Campbell earned $774 million, or $2.41 per share, down from $805 million, or $2.42 per share, in the previous year. Annual revenue dipped slightly to $7.71 billion from $7.72 billion.

For fiscal 2013, Campbell foresees adjusted earnings of $2.51 to $2.57 per share. Revenue is expected to climb 10 percent to 12 percent, implying a range of $8.48 billion to $8.64 billion.

Wall Street expects earnings of $2.52 per share on revenue of $8.47 billion.

The company's shares rose 40 cents, or 1.1 percent, to $35.53 in morning trading after rising as high as $36.28 earlier in the session, their highest level since November 2010.