PHILADELPHIA _ Campbell Soup Co.'s foray into fresh food has suffered some spoilage.
The Camden, N.J., company said Thursday it took a $141 million write-down on its Bolthouse Farms fresh carrot and carrot ingredients unit, conceding that the California business is not likely to grow as fast as was hoped when Campbell bought Bolthouse for $1.55 billion in 2012.
The Campbell Fresh division, which includes Bolthouse, Garden Fresh Gourmet salsa and dips, and Campbell's fresh soups, had fiscal 2016 sales of $925 million excluding the impact of an acquisition, down 4 percent from the year before. On the same basis, operating profits for the 12 months ended July 31 were down 2 percent, Campbell said.
In the fourth quarter, a juice recall and production problems in the fresh carrot business were big factors in a 12 percent decline in sales and a 62 percent drop in operating earnings for the Campbell Fresh division, the company said.
"This performance is unacceptable. I expect far more from the Campbell Fresh business," Campbell chief executive Denise Morrison told analysts on a conference call.
The write-down amounts to 20 percent of the goodwill Campbell recorded when it bought Bolthouse in a bid to expand beyond its canned and jarred staples sold in the center-store aisles of supermarkets into faster-growing areas in the produce and refrigerated sections of stores. Goodwill is the value of a business beyond its physical assets, such as future growth opportunities.
Campbell's shares closed down more than 6 percent, or $3.81, to $56.91.
Morrison told analysts on a conference call that Bolthouse management made some production decisions that led to the harvesting of smaller-than-normal carrots. That caused dissatisfied customers to bolt for other suppliers, she said.
Morrison spoke of this year's Bolthouse carrot problems as short term, but a year ago the unit was hurt by a slowdown in demand for carrot concentrate in Japan.
On the juices side of Bolthouse Farms, a recall in June of 3.8 million bottles of Bolthouse Farms Protein PLUS drinks, because they could potentially spoil, hurt results. Fixing the problem has forced changes in production that have reduced the amount of juice that can be made. The company used to be able to run the production line for 72 hours before stopping to maintain it. Now the line has to stop every 24 hours, Morrison said.
She said management of that unit has been revamped, though Jeff Dunn, who heads Campbell Fresh and came to Campbell with Bolthouse, is still in place.
Overall, Campbell's full-year revenues were $7.96 billion, down slightly from $8 billion the year before. Its earnings for interest and taxes were $960 million, down 9 percent from $1.05 billion.
In a sign of confidence, Campbell's board of directors approved a 12 percent increase its quarterly dividend to 35 cents per share, from 31.2 cents per share. That is the first dividend increase in three years.
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