Campbell Soup Co on Tuesday reported a smaller-than-expected decline in quarterly earnings, boosting shares of the soup maker a week before its proxy showdown with hedge fund Third Point LLC.
Campbell shares, which have lost nearly one-third in value over the past two years, jumped more than 5 percent.
"The stock should go higher today because the company met its very low expectations for the quarter," Robert Moskow, analyst, Credit Suisse said. "The results in the quarter certainly don't look good from an objective standpoint."
Net earnings attributable to the company fell to $194 million, or 64 cents per share, in the first quarter ended Oct. 28, from $275 million, or 91 cents, a year earlier. Organic sales, which do not include revenue from recent acquisitions, fell 3%.
The 149-year-old company, which has struggled for years to attract young consumers to its namesake soups and Pepperidge Farm cookies, launched a cost-cutting and divestment plan at the end of August.
Camden, New Jersey-based Campbell has been embroiled in a bitter proxy fight with billionaire Daniel Loeb's Third Point hedge fund since September. Loeb has campaigned aggressively to replace some board members. Investors are scheduled to vote on Campbell directors at an annual meeting on 29 November.
"We are open to a solution (with Third Point) that makes sense and doesn't compromise our ability to deliver the plan,"Keith McLoughlin, interim chief executive officer told Reuters.
McLoughlin, who has been a Campbell board member since 2016, was tapped to fill in temporarily when CEO Denise Morrison unexpectedly stepped down in May. The company, which reported weak corporate earnings for years under Morrison, has said it will name a new CEO before the end of the year.
Campbell, which also owns the Prego pasta sauce and Goldfish cracker brands, said it has begun the process of divesting its international and fresh food businesses.
The company said the units, which were put up for sale in August, have attracted strong interest from potential buyers.
Excluding items, the company earned 79 cents a share in the first quarter ended 28 October, beating the average analyst estimate of 70 cents, according to Refinitiv data.
"We're getting traction in our soup business, integrating in Snyder's-Lance. Divestitures are well underway. We're driving out costs," McLoughlin said in the interview.
Earnings were hurt by "significantly" higher costs for steel and aluminum as well as a rise in freight and logistics expenses, McLoughlin added. Costs for butter, wheat and grains also were up.
Campbell, which uses steel and aluminum to make its soup cans, said some of the inflation has been exacerbated by global trade tensions that have hurt profits across the consumer goods industry.
Start-up problems at a new distribution facility in Findlay, Ohio, also cut into earnings. McLoughlin said the problems had not continued into the second quarter.
The stock was up 5.7% to $40.66.