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Campbell Soup profit down, but U.S. unit rebounds

By Brad Dorfman
/ Source: Reuters

By Brad Dorfman

CHICAGO (Reuters) - Campbell Soup Co posted lower quarterly profit on Friday as the largest U.S. soup maker was hurt by soaring commodity costs.

But the key U.S. soup business rebounded in the quarter after a slow start to the soup season, and Campbell stood by its full-year earnings forecast, sending shares up nearly 7 percent amid a broad rally for food stocks. The stock had fallen almost 15 percent since mid-December.

"We don't expect the Street to punish the stock as it's been beaten up nicely over the past 3 months," Jonathan Feeney, analyst at Wachovia Securities, said in a research note.

Food companies have been hit by surging costs for ingredients like wheat and cocoa. Aside from making soup, Campbell also owns the Pepperidge Farm baking business and Godiva chocolates, but has agreed to sell the latter.

Campbell said it is raising prices and improving productivity to help offset the cost increases.

Profit fell to $274 million, or 71 cents a share, in the fiscal second quarter ended January 27, from $285 million, or 72 cents a share, a year earlier.

Excluding one-time items, earnings were 69 cents a share, compared with the average analyst expectation of 71 cents a share, according to Reuters Estimates.

Sales rose 7 percent to $2.22 billion.

Soup sales rose 4 percent, driven by an 8 percent increase in ready-to-eat soup. but sales of higher margin condensed soups fell 1 percent.

For the year, Campbell expects 2008 earnings per share to rise 5 percent to 7 percent from an adjusted 2007 base of $1.95 a share.

Campbell shares were up $2.10 at $33.61 on Friday on the New York Stock Exchange.

(Reporting by Brad Dorfman; editing by Jeffrey Benkoe)