Campbell: Godiva sale lifts profit, bakery unit suffers

Camden / NJ. (csc) Campbell Soup Company reported net earnings for the Q3/2008 ended April 27, of 532 million USD, compared to 217 million USD in the year-ago period. The current quarter´s reported net earnings included a gain from the sale of the Godiva business, partially offset by charges associated with previously announced restructuring initiatives. Excluding all items impacting comparability in both periods, adjusted net earnings were 165 million USD compared to 179 million USD in the prior year´s quarter.

Significant restructuring charges during Q3/2008 led to an operating loss of 92 million USD within the Baking and Snacking division of the Campbell Soup Company. The loss compared with earnings of 45 million USD in the Q3 of fiscal 2007. Sales for Baking and Snacking were 502 million USD, an increase of 14 percent from a year ago. A breakdown of the change in sales follows:

• Volume and mix added four percent;
• Price and sales allowances added six percent;
• Increased promotional spending subtracted one percent;
• Currency added six percent;
• The divestiture of the company´s Papua New Guinea operations subtracted one percent.

Further details of sales results include the following:

• Pepperidge Farm achieved double-digit sales growth with gains in all businesses: cookies and crackers, bakery, and frozen.
  • In the cookies and crackers business, sales gains were driven by the performance of «Goldfish» crackers and the launch in selected markets of Baked Naturals, a line of adult savory snack crackers.
  • The bakery business delivered double-digit sales gains behind continued consumer demand for whole-grain breads and growth in sandwich rolls.
• Arnott´s sales increased due to the favorable impact of currency and solid gains in the biscuit business, primarily related to savory snack products.

Operating losses were 92 million USD compared with 45 million USD of operating earnings a year ago. The current quarter included 144 million USD of restructuring charges. The remaining increase in operating earnings was primarily driven by the favorable impact of currency and gains at Arnott´s. Pepperidge Farm earnings were flat due to higher commodity costs. For the nine months, sales increased eleven percent to 1,525 billion USD. A breakdown of the change in sales follows:

• Volume and mix added two percent;
• Price and sales allowances added five percent;
• Currency added five percent;
• The divestiture of the company´s Papua New Guinea operations subtracted one percent.

Operating earnings were 48 million USD compared to 189 million USD in the year-ago period. The current period included 144 million USD of restructuring charges. Operating earnings in the prior period included a 23 million USD gain from the sale of the Pepperidge Farm facility. Excluding the gain from the sale and restructuring charges, the remaining increase in operating earnings was primarily due to the favorable impact of currency and strong performance in Pepperidge Farm and Arnott´s biscuits, partially offset by a decline in the snack foods business.

_{Campbell´s Baking and Snacking division includes the following businesses: «Pepperidge Farm» cookies, crackers, breads and frozen products in U.S. retail, «Arnott´s» biscuits in Australia and Asia Pacific, and «Arnott´s» salty snacks in Australia.}