Campbell Soup Stock Rising Thanks to Cost Cutting

Tuesday morning's earnings report beat expectations.

Campbell Soup Co. headquarters in Camden, N.J.

Campbell Soup Co. headquarters in Camden, N.J.

With consumers increasingly looking for healthier meals, the packaged food industry has taken its share of lumps in recent years. Its forced stalwarts like Campbell Soup Co. to make big changes — like removing artificial ingredients from its soup line, acquiring organic food companies and organizing the company into three distinct parts.

And if today’s earnings report is any indication, it appears to be working — at least a little. Campbell’s saw its stock rise 4 percent in morning trading, following a quarterly earnings report where the company reported better-than-expected profits and said adjusted earnings are expected to grow from $2.75 to $2.83 per share — much better than previous guidance of $2.53 to $2.58 per share.

The company has an ambitious plan to $250 million per year by the end of 2018 and shareholders appear to be responding to it. In an earnings call Tuesday morning, CEO Denise Morrison said that employees have an “ownership mindset where employees treat every dollar like it’s their own.”

Still, profits were down nearly 22 percent compared to a year ago. It saw profits of $194 million this quarter, but that number was $248 million in the same quarter a year ago. But the adjusted profits for the quarter were $297 million.

In a statement, Morrison said she was pleased to see that organic sales for the quarter were comparable to the “solid prior year” but said that the company recognizes that it has “more work ahead to improve our growth trajectory.”

“We began fiscal 2016 after successfully implementing a number of changes to align our enterprise structure with our strategy,” she said. “Most significant among those changes were the formation of three new divisions with clear portfolio roles and the roll-out of a major cost savings initiative that included streamlining our organization, the launch of an Integrated Global Services organization and initiating zero-based budgeting. In addition, we have revised our reporting segments to reflect our new structure. We have made clear and meaningful progress and commence the new fiscal year better positioned to execute against our strategic imperatives.”

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