UPDATE 2-Campbell Soup profit beats Street; sales rise 10 percent
Feb 15 (Reuters) - Campbell Soup reported a higher-than-expected quarterly profit on Friday as gains in its soup and snacks businesses offset a decline in its drinks unit.
The company, which also sells V8 juices, Pepperidge Farm cookies and Prego pasta sauces, said U.S. soup sales rose 1 percent from the year-earlier period. Sales rose 7 percent for snacks and fell 3 percent for U.S. beverages.
Overall, net sales increased 10 percent to $2.33 billion, due mostly to the company's recent acquisition of Bolthouse Farms.
Campbell, the world's largest soup maker, also stood by its forecast for fiscal 2013, which calls for earnings of $2.51 to $2.57 per share on sales growth of 10 percent to 12 percent.
Excluding restructuring and other charges, earnings in Campbell's second quarter ended on Jan. 27 were 70 cents per share. On that basis, analysts on average were expecting 66 cents, according to Thomson Reuters I/B/E/S.
Net income was $190 million, or 60 cents per share, down from $205 million, or 64 cents per share, a year earlier.
But the company, which has been trying to reverse weak soup demand with a slew of new products, spent less on advertising in that business. One analyst called that "a ticking time bomb."
"We have seen many food companies in the past cut advertising spending as a percentage of sales," said JPMorgan's Ken Goldman, "and while it usually helps boost (earnings) in the near term, it almost always leads to eroded brand equities and lower sales in the long term."
Shares of Campbell Soup jumped as much as 6 percent on Thursday after news of a buyout of rival H.J. Heinz sparked hopes of other acquisitions in the packaged foods industry.
The shares were up 1.4 percent at $39.26 in morning trading on the New York Stock Exchange.