Nov 22 (Reuters) - Campbell Soup Co, the world’s largest soupmaker, reported a better-than-expected quarterly profit as the company kept a lid on costs, sending its shares up more than 5 percent on Tuesday.
The company, which also sells Pepperidge Farm snacks and Prego pasta sauce, had initiated a restructuring and cost-saving drive last year to prepare itself for changing consumer trends that were affecting the food industry.
Demand for packaged food in the United States has taken a hit as more customers shift to healthier options, pushing companies to invest in organic and fresh food businesses.
As part of the strategy, Campbell has acquired brands such as Bolthouse Farms and Garden Fresh Gourmet, which makes refrigerated salsa and hummus.
However, the company’s total sales in the latest quarter were flat as its fresh foods business struggled with production issues at its Bolthouse Farms refrigerated beverages and sluggish demand for carrots.
Campbell’s fresh food business is yet to fully recover from a recall of certain protein drinks and a disappointing carrot harvest earlier this year.
“Campbell Fresh continues to rebuild capacity for Bolthouse Farms Protein PLUS drinks following a voluntary recall last quarter, and remains focused on working to regain lost carrot customers over time with improved quality,” Chief Executive Denise Morrison said.
Sales from Campbell Fresh unit, which accounted for 10.6 percent of total revenue in the first quarter, fell 6 percent to $234 million.
The company said its gross margin in the first quarter rose to 38.2 percent from 34.3 percent a year earlier. Total expenses fell 7.6 percent to $1.75 billion.
Campbell’s net income jumped to $292 million, or 94 cents per share, in the latest quarter ended Oct. 30 from $194 million, or 62 cents per share, a year earlier.
Excluding certain items, Campbell Soup earned $1.00 per share, beating analysts’ average estimate of 95 cents per share, according to Thomson Reuters I/B/E/S.
The company reported net sales of $2.20 billion, in line with analysts’ expectations.
The company’s shares were up 3.8 percent at $57.13 in afternoon trading on the New York Stock Exchange. (Reporting by Gayathree Ganesan in Bengaluru; Editing by Sai Sachin Ravikumar and Anil D‘Silva)