Campbell: Baking and Snacking sales increased in Q2/2010

Camden / NJ. (csc) Campbell Soup Company reported its fiscal 2010 second-quarter results. Summary:

• Improved earnings performance in Baking and Snacking and International Soup, Sauces and Beverages Segments.
• Continued gross margin improvement driven by increased productivity.
• Sales increased one percent to 2’153 million USD; U.S. Soup sales decreased eight percent.

Net earnings for the quarter ended January 31 were 259 million USD compared with 233 million USD in the prior year, an increase of eleven percent. Net earnings per share were 0,74 USD in the current quarter compared with 0,64 USD in the prior period, an increase of 16 percent.

Douglas R. Conant, Campbell´s President and CEO: «In the quarter, we delivered good earnings growth driven mainly by overall strong cost management, productivity gains and favorable currency. In particular, our Baking and Snacking and International Soup, Sauces and Beverages segments improved their earnings performance. In U.S. Soup, Sauces and Beverages, earnings declined due to lower sales, particularly in ready-to-serve soup. Our condensed soup business, especially cooking varieties, and our broth business both delivered solid performance and remained well positioned in this economic environment. In the ready-to-serve business, our lower promotional spending and intense competitive activity in the broader simple meals category impacted our results. We have plans in place to drive improved performance in ready-to-serve soup in the second half».

Conant concluded: «Looking ahead, we remain on track to deliver good bottom-line growth for the year supported by continued cost management and productivity gains. Based on our results through the first half and our plans for the remainder of the year, last week we reiterated our full-year guidance for adjusted net earnings per share growth and adjusted earnings growth before interest and taxes, despite more modest assumptions for sales growth».

Baking and Snacking

Baking and Snacking includes the following businesses: «Pepperidge Farm» cookies, crackers, breads and frozen products in U.S. retail, «Arnott´s» biscuits in Australia and Asia Pacific. Sales for Baking and Snacking were 489 million USD in the second quarter, an increase of eleven percent from a year ago. A breakdown of the change in sales follows:

• Volume and mix added three percent
• Increased promotional spending subtracted three percent
• Currency added ten percent
• Acquisitions added one percent

Further details of sales results included the following:

• Sales of Pepperidge Farm increased due to higher volumes and the acquisition of Ecce Panis Inc., partially offset by increased promotional spending.
  • Excluding the acquisition of Ecce Panis, sales from the bakery business decreased, reflecting higher promotional spending, partly offset by increased volumes.
  • In the cookies and crackers business, sales increased reflecting the continued solid growth of «Goldfish» snack crackers, partly offset by a decline in cookies.
• In Australia, sales increased due to currency and continued growth in Arnott´s, led by higher sales of both savory and sweet biscuit products.

Operating earnings were 73 million USD compared with 53 million USD in the prior-year period. The prior-year quarter included two million in costs related to a restructuring program. The increase in operating earnings was due to the favorable impact of currency and margin growth in both Pepperidge Farm and Arnott´s.

For the first half, sales increased seven percent to 1’019 million USD. A breakdown in the change in sales follows:

• Volume and mix added two percent
• Price and sales allowances added one percent
• Increased promotional spending subtracted three percent
• Currency added six percent
• Acquisitions added one percent

Operating earnings were 173 million USD compared with 136 million USD in the year-ago period. The prior-year period included two million USD in costs related to a restructuring program. The increase in operating earnings was due to the favorable impact of currency and margin growth in both Pepperidge Farm and Arnott´s.

Fiscal 2010 Guidance

Campbell maintained its full-year guidance for adjusted earnings growth before interest and taxes (EBIT) of six to seven percent and adjusted net earnings per share growth of nine to eleven percent from the fiscal 2009 adjusted base of 2,21 USD. The company revised its fiscal 2010 guidance for sales growth to 2,5 to 3,5 percent from the prior range of four to five percent.

Info: Campbell Reports Second Quarter Results (complete press release).