Will Cost Saving Initiatives Boost Campbell Soup Q2 Results?

(RTTNews) - Campbell Soup Co. (CPB), the world's largest soup maker, is likely to report its second-quarter results before the bell on Thursday, February 25. Analysts polled by Thomson Reuters are looking for earnings of $0.80 per share on revenue of $2.20 billion. Analysts' estimate typically exclude certain special items.

The company estimates that second-quarter adjusted EBIT will increase by about 26%, due primarily to improved gross margin performance and cost savings. Adjusted earnings are estimated to be about $0.87 per share.

Second-quarter reported net sales is expected to decline by about 1%, reflecting the negative impact of currency translation, partly offset by the acquisition of Garden Fresh Gourmet. Organic net sales are expected to be comparable to the prior year.

For the fiscal year 2016, Campbell still sees the year-over-year change in net sales to be in the range of a decline of 1% to flat. The company now expects adjusted EBIT to increase by 10% - 13%, compared to prior guidance for growth of 4% - 7%, and adjusted EPS to increase by 9% - 12%, or $2.88 - $2.96 per share compared to prior guidance of 4% - 7%, or $2.75 - $2.83 per share.

The company said its three-year cost savings initiative is delivering better-than-expected results. As a result, Campbell increased its savings target from $250 million - $300 million, which it expects to achieve by the close of fiscal 2018. The company now expects $120 million - $140 million in incremental savings from these cost reduction initiatives in fiscal 2016, compared to its previous estimate of $80 million - $100 million.

In the previous quarter, Campbell Soup reported adjusted earnings per share of $0.95, an increase of 22% from $0.78, last year. Analysts expected earnings of $0.76 per share for the quarter.

Net earnings attributable to the company decreased to $194 million or $0.62 per share from $248 million or $0.78 per share, last year.

Sales dropped 2% to $2.20 billion primarily due to the adverse impact of currency translation. The company said its first-quarter organic sales were comparable to the prior year as higher selling prices and a reduction in promotional spending were offset by volume declines. Analysts expected revenue of $2.21 billion for the quarter.