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Campbell Soup

Paul Sakuma

Campbell Soup Co. 's quarterly net profit fell 22 per cent due to commodity hedging, a stronger U.S. dollar, a shorter quarter and writedowns for European trademarks, but earnings before items exceeded Wall Street expectations.

The company, known for its canned soup with the red and white label, forecast that earnings for the current year would also beat analysts' expectations.

Campbell's earnings were announced the same week that Kraft Foods Inc. disclosed an offer to acquire British chocolate maker Cadbury PLC, sparking renewed speculation about other consolidation in the food industry.

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During a conference call with analysts, Campbell's chief executive officer Douglas Conant reiterated his belief in "the power" of food companies that were focused on a few core categories, rather than larger, more diversified companies.

"I think we are better positioned to deliver our numbers and to create shareholder value in the near-term and long-term just the way we are positioned today," he said.

"There are several companies that are looking to improve their performance in the near term, and they may make some decisions that I might not make," he said.

Net profit was $69-million (U.S.), or 20 cents a share, compared with $89-million, or 24 cents, a year earlier.

Operating earnings rose to 30 cents a share in the fiscal fourth quarter, ended Aug. 2, from 26 cents a year earlier. This excludes changes in market value of commodity hedges and the writedown for European trademarks.

On that basis, analysts, on average, had forecast 26 cents a share, according to Reuters Estimates.

"Overall, their portfolio caters to a consumer that is eating more at home," Morningstar analyst Erin Swanson said.

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She said that Campbell's forecast for earnings was in line with its longer-term targets.

Fourth-quarter sales fell 11 per cent to $1.53-billion due to the stronger U.S. dollar and having 13 weeks in the 2009 quarter instead of the 14 weeks in the 2008 quarter.

Excluding the impact of currency, the extra week and acquisitions and divestitures, sales were up 2 per cent, the company said.

Sales of condensed soups rose 4 per cent in the United States, while ready-to-serve soups rose 14 per cent. Prego pasta sauce sales also rose, the company said.

Campbell forecast a 5 per cent to 7 per cent rise in earnings in the current fiscal year from the adjusted $2.22 a share reported for fiscal 2009.

That would be equal to about $2.33 to $2.38 a share. analysts on average forecast $2.31 a share, according to Reuters Estimates.

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