CHICAGO (Reuters) - Campbell Soup Co on Tuesday reported a smaller-than-expected decline in quarterly earnings, sending shares of the embattled soup maker up 4 percent in premarket trading.
Campbell, which has struggled for years to attract young consumers to its namesake soups and Pepperidge Farm cookies, launched a dramatic cost-cutting and divestment plan at the end of August.
Excluding items, the 149-year-old company earned 79 cents a share in the first quarter ended Oct. 28, beating analysts’ average estimate of 70 cents, according to Refinitiv data.
“We’re getting traction in our soup business, integrating in Snyder’s-Lance, divestitures are well underway, we’re driving out costs,” Interim Chief Executive Keith McLoughlin told Reuters in a phone interview.
McLoughlin, who has been a Campbell board member since 2016, was tapped to fill in temporarily when CEO Denise Morrison unexpectedly stepped down in May. The company, which reported weak corporate earnings for years under Morrison, has said it will name a new CEO before the end of the year.
Campbell, owner of the Prego pasta sauce and Goldfish cracker brands, also said it had begun the process of divesting its international and fresh food businesses.
The company said the units, which were put up for sale in August, have both attracted strong interest from potential buyers.
Campbell, whose stock has lost about a third in value over the past two years, has been embroiled in a bitter proxy fight with activist shareholder Third Point LLC. The hedge fund, run by billionaire Daniel Loeb, has campaigned aggressively to replace some members of Campbell’s board.
Camden, New Jersey-based Campbell did not provide an update on its CEO search or fight with hedge fund Third Point.
“We are open to a solution (with Third Point) that makes sense and doesn’t compromise our ability to deliver the plan,” McLoughlin said.
Net earnings attributable to the company fell to $194 million, or 64 cents per share, in the first quarter ended Oct. 28, from $275 million, or 91 cents per share, a year earlier.
Earnings were hurt by “significantly” higher costs for steel and aluminum, as well as a rise in freight and logistics expenses, McLoughlin said. Costs for butter, wheat and grains also rose.
Campbell, which uses steel and aluminum to make its iconic soup cans, has struggled this year with surging commodities and transportation costs. Some of this inflation has been exacerbated by global trade tensions, hurting earnings across the consumer goods industry.
The company also said earnings were hurt by start-up challenges at a new distribution facility in Findlay, Ohio. McLoughlin said these problems had not continued into the second quarter.
Net sales jumped about 25 percent to $2.69 billion, boosted by Campbell’s recent acquisitions of Snyder’s-Lance and Pacific Foods. Organic sales fell 3 percent.
Reporting by Richa Naidu; Editing by Nick Zieminski