Campbell Soup Co raised its fiscal full-year earnings forecast and posted better-than-expected quarterly profit and sales due to strong demand for soups and snacks.
The 150-year-old company has sought to revitalise its canned soup business, rolling out new recipes, eliminating preservatives and amping up marketing to lure back health-conscious customers who favour freshly made salads and sandwiches.
Campbell's investments drove higher demand for condensed soups and broths in the quarter, boosting sales at its US soup unit by 1%.
"We showed marked improvement and executed well in what was the most important quarter for soup," chief executive officer Mark Clouse said.
Campbell's stock has gained about 24% since late 2018 when Clouse was hired to turn the company around.
Hoping to build on this momentum, Campbell has more innovation planned for this year, Clouse said in an interview with Reuters.
Changes will include increasing protein in products using bone broth, and making cups of soup that are packaged with dry garnish, similar to yogurt cups that are topped with oatmeal or nuts.
"We've got a lot of big bets coming up," Clouse said. The company is also working to rebuild retailer relationships, some of which had soured in recent years.
Campbell lost business from Walmart Inc in 2018, for instance, over a dispute about prices and promotions.
Campbell, which makes Prego pasta sauces and Pepperidge Farm cookies and Goldfish crackers, has also boosted investments to address changing consumer tastes in its snacks business.
Organic sales at its snacks division rose 2%, due to higher demand for Goldfish crackers, Kettle Brand and Cape Cod potato chips.
Campbell sold its fresh food and certain international snack brands last year so it could focus on growing its US soup and snacks businesses.
The company said the divestments helped it reduce debt and it now expects fiscal 2020 adjusted earnings of $2.55 to $2.60 per share because of lower adjusted net interest costs. Campbell's new forecast is 5 cents more than previous guidance.
Net earnings attributable to the company was $1.21 billion, compared to a loss of $59 million a year earlier. Excluding one-time items, the company earned 72 cents per share, beating analysts' expectation of 66 cents, according to IBES data from Refinitiv.
The company said net sales fell marginally to $2.16 billion in the second quarter ended 26 January, but beat analysts' expectations of $2.15 billion.