By Richa Naidu and Nivedita Balu
(Reuters) - Campbell Soup Co <CPB.N> on Friday reported better-than-expected fourth-quarter profit and margins as the food company sold more soups and snacks, tightened up its supply chain and cut costs, sending shares up more than 8%.
To better focus on its mainstream soup and snack businesses, Campbell has been streamlining its operations by disposing its international and fresh businesses, including Bolthouse Farms and Garden Fresh Gourmet salsa. The company has introduced new soup recipes with added chicken and tomatoes and eliminated preservatives to also draw in health-conscious customers.
"It was great to see growth in soup. It's the first time in quite a number of years that we've been able to drive growth on the business," Chief Executive Officer Mark Clouse told analysts on a call to discuss earnings.
Camden, New Jersey-based Campbell, which also makes Prego pasta sauces, Kettle potato chips and Perpperidge Farm cookies, reported its best gross margin in six quarters. Shares rose 8.2% to $46.87 in morning trading.
The quality of Campbell's fourth-quarter results was strong and the outlook for the rest of the year was better than feared, given the impact of divestitures, J.PMorgan analyst Ken Goldman said. "Momentum is on Campbell's side right now, and we expect a solid season of soup shipments ahead."
Campbell said it expects net sales for fiscal 2020 to grow by 1%-3%, adjusted earnings per share to increase by 9%-11%.
Last month, Campbell said it would sell Kelsen Group, a unit known for Royal Dansk cookies, to a Ferrero affiliated company for $300 million. It is also selling its Arnott's biscuits and some of its international operations.
For the quarter ended July 28, Campbell earned 42 cents, excluding items, beating Wall Street estimates by 1 cent, according to IBES data from Refinitiv. Adjusted gross margins of 33.7% beat the Refinitiv forecast of 32.7%. Campbell said the comparative quarter included costs from its voluntary recall of Flavor Blasted Goldfish crackers in July 2018.
Net sales from continuing operations rose 2% to $1.78 billion compared with a year-ago quarter. The company recorded a net loss of $8 million, or 3 cents per share, compared with a profit of $94 million, or 31 cents per share.
(Reporting by Nivedita Balu in Bengaluru and Richa Naidu in Chicago; Editing by Shinjini Ganguli and Marguerita Choy)