Feb. 18 (Bloomberg) -- Campbell Soup Co., the world’s largest soup maker, fell the most in two years after cutting 2011 forecasts for profit and sales, citing intensifying competition.
Sales may drop as much as 1 percent, Campbell said today. That compared with a previous forecast of at least a 1 percent increase. Earnings will fall as much as 3 percent, or to $2.40 a share, compared with earlier predictions of a gain. Analysts had projected $2.51 on average, according to a Bloomberg survey.
Chief Executive Officer Douglas Conant said increasing spending on promotions failed to boost revenue as much as expected last quarter, with U.S. soup sales declining 4 percent. That business, whose brands include the Chunky line, accounts for about 40 percent of sales at Camden, New Jersey-based Campbell.
“The shares will be down today and will likely hold here over the next several months as we await a better soup performance,” Christopher Growe, an analyst at Stifel Nicolaus & Co., said in a note to clients today. The St. Louis-based analyst recommends holding the shares.
Campbell fell $1.36, or 3.9 percent, to $33.58 at 4:02 p.m. in New York Stock Exchange composite trading, the biggest decline since February 2009.
Conant said last year that he will step down as CEO July 31, and operations chief Denise Morrison, who has overseen the company’s U.S. soup business, will succeed him. Morrison spearheaded a push to cut sodium in soups, helping Campbell more than quadruple its products with lower sodium levels over the past five years. That has so far failed to lift sales of ready-to-eat soups, which fell 4 percent in the second quarter.
This is the second time Campbell has cut its annual sales forecast for its fiscal year. Revenue has dropped for three straight quarters as other quick-to-make meals, such as macaroni and cheese or frozen pizza, gained favor with shoppers.
Campbell also joined foodmakers such as Kraft Foods Inc. and Kellogg Co. in highlighting increasing raw-materials costs as a challenge. The company plans to raise prices on soups in the U.S. to help make up for the expense, Chief Financial Officer Craig Owens said on a conference call today.
Net income in the second quarter ended Jan. 30 fell 7.7 percent to $239 million, or 71 cents a share, from $259 million, or 74 cents, a year earlier. Sales dropped 1.2 percent to $2.13 billion.
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