18 July 2024
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Campbell: Reports Fourth-Quarter and Full-Year Results

Camden / NJ. (csc) Campbell Soup Company reported its fourth-quarter and full-year results for fiscal 2014. The company reported earnings from continuing operations for the quarter ended August 03, 2014, of 137 million USD, or 0,43 USD per share, compared with earnings of 117 million USD, or 0,37 USD per share, in the prior year. In the fourth quarter of fiscal 2014, Campbell implemented initiatives to improve supply chain efficiency in Australia and reduce overhead across the organization. The company recorded pre-tax restructuring charges of 20 million USD (14 million USD after tax or 0,04 USD per share) related to these initiatives. In addition, the company incurred pre-tax restructuring-related costs of one million USD associated with previously-announced initiatives. The company also recognized an additional pre-tax pension settlement charge of four million USD (three million USD after tax or 0,01 USD per share) associated with a U.S. pension plan. Excluding items impacting comparability in both periods, adjusted earnings from continuing operations increased 14 percent to 155 million USD, compared with 136 million USD in the prior-year quarter, and adjusted earnings per share from continuing operations increased 14 percent to 0,49 USD, compared with 0,43 USD in the year-ago quarter. The quarter benefited from an additional week in fiscal 2014, which contributed an estimated 25 million USD to earnings from continuing operations and 0,08 USD to earnings per share from continuing operations.

President and Chief Executive Officer Denise Morrison: «Our fiscal 2014 results were in line with our most recent guidance, including increases in net sales, adjusted Ebit and adjusted EPS. We continued to make progress in reshaping Campbell, although we recognize that it is taking longer than originally anticipated. The Kelsen Group acquisition expanded our baked snacks business to China and Hong Kong. Bolthouse Farms achieved strong top-line growth as we increased distribution and invested in advertising and consumer programs to build brand equity. We divested our European simple meals business to focus on faster-growing markets. This year, we made several strategic investments, funded in part by reduced overhead costs. We believe that the diversification of our portfolio and responsible cost management will change our growth trajectory over time».

Morrison concluded, «Looking ahead, we plan to deliver modest growth in fiscal 2015, despite a consumer environment that is likely to remain challenging. As we announced at our July 21 Investor Day, we expect fiscal 2015 growth to be below our long-term targets for sales and earnings. We intend to make meaningful improvements in our core businesses and drive innovation across the company with the launch of more than 200 new products. We plan to deliver sales growth in U.S. Simple Meals, including U.S. Soup, and in Pepperidge Farm, by optimizing all the drivers of demand. We will execute our turnaround plans to strengthen U.S. Beverages and expect to stabilize sales in Australia, where we took further action in the fourth quarter to improve productivity. We are counting on continued growth in Bolthouse Farms, Kelsen Group and Plum, which have added more than one billion USD in sales in faster-growing categories. As always, we will be relentless in managing our costs and margins to improve profit performance. We are confident that Campbell is on the right path, and we are committed to executing our strategy to deliver sustainable, profitable net sales growth».

Fourth-Quarter Financial Details – Continuing Operations

Gross margin was 34,1 percent, compared with 36,2 percent a year ago. Excluding items impacting comparability in both periods, adjusted gross margin for the quarter was 34,3 percent, compared with 36,7 percent a year ago. The decline was primarily attributable to increased supply chain costs, cost inflation and higher promotional spending, partly offset by productivity improvements.

Marketing and selling expenses decreased one percent to 189 million USD. The decrease was primarily due to lower advertising and consumer promotion expenses, lower selling expenses and the impact of currency, partly offset by the impact of acquisitions.

Administrative expenses decreased 46 million USD to 149 million USD, primarily due to lower incentive compensation costs and cost savings from restructuring initiatives.

Ebit was 234 million USD, compared with 178 million USD in the prior-year quarter. Excluding items impacting comparability in both periods, adjusted Ebit increased 25 percent to 259 million USD. The increase was primarily due to lower administrative expenses and the benefit of the additional week, partly offset by a lower gross margin percentage.

The tax rate in the quarter was 33,8 percent, compared with 22,3 percent in the year-ago quarter. Excluding items impacting comparability in both periods, the current quarter´s adjusted tax rate was 33,2 percent, compared with 24,7 percent in the year-ago quarter. The prior-year rate for the quarter benefited from lower taxes on foreign earnings.

Full-Year Results from Continuing Operations

Earnings from continuing operations for the fiscal year were 737 million USD, or 2,33 USD per share, compared with earnings of 689 million USD, or 2,17 USD per share, in the prior year. Excluding items impacting comparability in both periods, adjusted earnings from continuing operations increased two percent to 800 million USD, compared with 786 million USD in the prior year, and adjusted earnings per share from continuing operations increased two percent to 2,53 USD, compared with 2,48 USD in the year-ago period. As with the current quarter, the fiscal year benefited from the additional week, which contributed an estimated 25 million USD to earnings from continuing operations and 0,08 USD to earnings per share from continuing operations.

For the fiscal year, sales from continuing operations increased three percent to 8’268 million USD. Organic sales declined one percent. A breakdown of the change in sales for the fiscal year is as follows: acquisitions added three percent; price and sales allowances added one percent; increased promotional spending subtracted two percent; currency subtracted one percent; the 53rd week added two percent.

Full-Year Financial Details – Continuing Operations

Gross margin was 35,1 percent, compared with 36,2 percent a year ago. Excluding items impacting comparability in both years, adjusted gross margin was 35,4 percent, compared with 37,3 percent a year ago. The decline was primarily attributable to cost inflation, higher promotional spending, increased supply chain costs and the impact of acquisitions, partly offset by productivity improvements and higher selling prices.

Marketing and selling expenses decreased one percent to 935 million USD. The decrease was primarily due to lower advertising and consumer promotion expenses, the impact of currency, lower marketing overhead expenses and lower selling expenses, partly offset by the impact of acquisitions.

Administrative expenses decreased 104 million USD to 573 million USD, primarily due to lower incentive compensation costs, cost savings from restructuring initiatives and lower pension costs, partly offset by the impact of acquisitions.

Ebit was 1’192 million USD, compared with 1’080 million USD in the prior year. Excluding items impacting comparability in both years, adjusted Ebit increased four percent to 1’281 million USD. The increase was primarily due to lower administrative expenses, the benefit of the additional week and lower marketing expenses, partly offset by a lower gross margin percentage and lower organic sales.

Net interest expense decreased six million USD to 119 million USD, reflecting lower interest rates.

The tax rate in the fiscal year was 32,3 percent, compared with 28,8 percent in the prior year. Excluding items impacting comparability in both periods, the current year´s adjusted tax rate was 31,7 percent, compared to 29,8 percent in the prior year. The prior-year rate benefited from lower taxes on foreign earnings and the favourable settlement of certain U.S. state tax matters.

Cash flow from operations was 899 million USD, compared with 1’019 million USD in the prior year. The decline was primarily related to lower cash earnings and taxes paid on the divestiture of the European simple meals business, partly offset by lower working capital requirements.

Summary of Fiscal Q4/2014 and Full-Year Results by Segment

The summary includes the divisions «U.S. Simple Meals», «Global Baking and Snacking», «International Simple Meals and Beverages», «U.S. Beverages», «Bolthouse and Foodservice». For more information about all divisions, please refer to Campbell´s news release on the Company´s web server.

Global Baking and Snacking

Sales for Global Baking and Snacking were 628 million USD for the fourth quarter, an increase of ten percent from a year ago. The acquisition of Kelsen Group contributed 32 million USD to sales. The increase in sales reflected the following factors:

  • The acquisition of Kelsen Group added six percent
  • Volume and mix added three percent
  • Increased promotional spending subtracted five percent
  • Currency subtracted one percent
  • The 53rd week added seven percent

    Further details of sales results excluding the benefit of the additional week included the following:

    • Sales of Pepperidge Farm products decreased, driven by increased promotional spending partly offset by volume gains.
      • Sales of cookies and crackers were comparable to prior year with gains in “Goldfish” snack crackers offset by declines in «Pepperidge Farm» adult cracker varieties.
      • Sales of frozen and other products decreased.
      • Sales of fresh bakery products increased, driven by volume gains in bread and rolls.
      • Sales at Arnott´s decreased due to declines in Australia and the negative impact of currency, partly offset by strong gains in Indonesia.

    Operating earnings for the quarter were 98 million USD, an increase of 17 percent over the year-ago period. The increase was primarily driven by lower administrative expenses and the benefit of the additional week, partly offset by a lower gross margin percentage. The increase reflected growth in Pepperidge Farm and the addition of Kelsen Group´s operating results. Earnings in Arnott´s were comparable to the prior-year quarter.

    For the fiscal year, sales increased seven percent to 2’440 million USD. The acquisition of Kelsen Group contributed 193 million USD to sales growth. A breakdown of the change in sales follows:

  • The acquisition of Kelsen Group added eight percent
  • Volume and mix added one percent
  • Price and sales allowances added two percent
  • Increased promotional spending subtracted three percent
  • Currency subtracted three percent
  • The 53rd week added two percent

    Sales declines at Arnott´s in Australia were partly offset by sales growth in Pepperidge Farm and Indonesia.

    Operating earnings in the fiscal year were 332 million USD, compared with 316 million USD in the prior year, an increase of five percent. The increase was primarily driven by lower administrative expenses, the acquisition of Kelsen Group, lower marketing expenses and the benefit of the additional week, partly offset by a lower gross margin percentage and the unfavourable impact of currency. The increase included growth in Pepperidge Farm and the addition of Kelsen Group´s operating results, partly offset by lower earnings in Arnott´s.

    Global Baking and Snacking aggregates the following: Pepperidge Farm cookies, crackers, bakery and frozen products in U.S. retail; Arnott´s biscuits in Australia and Asia Pacific; and Kelsen cookies globally.


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    Campbell: Reports Fourth-Quarter and Full-Year Results

    Camden / NJ. (csc) Campbell Soup Company reported its results for the fourth-quarter and full-year of fiscal 2013. President and Chief Executive Officer Denise Morrison: «Campbell made solid progress in fiscal 2013 as we executed our dual mandate to strengthen our core business and expand into higher-growth spaces. Our full-year sales and adjusted Ebit growth were consistent with our most recent fiscal 2013 guidance and our EPS growth exceeded that guidance».

    «The centerpiece of our progress in strengthening our core business was the performance of U.S. Soup, which delivered five percent sales growth for the year by optimizing all the drivers of demand and accelerating consumer-focused innovation. In our Pepperidge Farm business, we delivered continued growth in Goldfish crackers, revitalized the cookies business and expanded our share in fresh bakery. We also faced some challenges this year and are taking actions to fix our underperforming U.S. Beverages and North America Foodservice businesses».

    Morrison continued, «We made tangible progress on the second part of our dual mandate to expand into higher-growth spaces by driving breakthrough innovation and accelerating external development. In fiscal 2013, we launched many new products, including Campbell´s Skillet Sauces and Campbell´s Go Soups to reach new consumers, such as Millennials».

    «We also added a trio of growth engines through our acquisitions of Bolthouse Farms, Plum Organics and the Kelsen Group. These acquisitions have combined annualized sales of approximately one billion USD and give us exciting new brand platforms to create value and attract new consumers. Bolthouse Farms, which delivered strong results in fiscal 2013, is a leader in the fast-growing packaged fresh foods category. Plum Organics is the number-two brand in the fast-growing premium organic baby food segment. The addition of Kelsen, a leading producer of premium butter cookies, gives us a position in baked snacks in China and Hong Kong. We also entered strategic alliances in Mexico to expand our access to manufacturing and distribution capabilities in this important market».

    «As previously announced, we are in final and exclusive negotiations for the potential sale of our simple meals business in Europe, which includes brands such as Liebig in France, Erasco in Germany, Blå Band in Sweden and Devos Lemmons and Royco in Belgium. This potential transaction reflects a strategic choice. Across our company, we are focusing our investments, resources and talent on iconic brands that we believe we can grow around the world».

    «Together, the actions under our dual mandate are reshaping our brand portfolio and shifting our center of gravity for a greater growth trajectory in the long term».

    Morrison concluded, «Looking ahead, we expect continued growth in our U.S. Soup and Pepperidge Farms businesses. We remain focused on increasing sales from faster-growing segments in North America; driving innovation with the launch of more than 200 new products; expanding availability in multiple channels; expanding our packaged fresh offerings; and accelerating growth in markets like China, Indonesia, Malaysia and Mexico. I´m excited about our direction and our progress. We have more work to do, but it´s undeniable that Campbell has come far in the last two years».

    Background on the Presentation of Results

    On August 12, 2013, the company announced the potential sale of its European simple meals business. This business, which was previously included in the International Simple Meals and Beverages segment, is now reported as a discontinued operation. Fourth-quarter results from discontinued operations reflect a non-cash impairment to reduce the carrying value of intangible assets, as well as a tax charge that is related to the potential sale.

    Following a summary of total company net earnings and net earnings per share results, this news release separately presents the results of continuing operations and discontinued operations. We also present combined sales and adjusted Ebit of continuing operations and discontinued operations for ease of comparison to the company´s most recent fiscal 2013 sales and earnings guidance. A review of segment results from continuing operations for the fourth quarter and fiscal year is also provided.

    Summary of Total Company Net Earnings and Net Earnings per Share

    In aggregate, the company reported a net loss for the quarter ended July 28, 2013, of 158 million USD or 0,50 USD per share, compared with net earnings of 127 million USD or 0,40 USD per share, in the prior year. Excluding items impacting comparability in both periods, adjusted net earnings increased nine percent to 142 million USD compared with 130 million USD in the prior year´s quarter and adjusted net earnings per share increased ten percent to 0,45 USD compared with 0,41 USD in the year-ago quarter. A detailed reconciliation of the reported financial information to the adjusted information is included at the end of this news release.

    Net earnings for the fiscal year were 458 million USD or 1,44 USD per share, compared with 774 million USD or 2,41 USD per share, in the year-ago period. Excluding items impacting comparability, adjusted net earnings increased seven percent to 836 million USD and adjusted net earnings per share increased eight percent to 2,64 USD compared with 2,44 USD in the prior year.

    Fourth-Quarter Results – Continuing Operations

    For the fourth quarter, sales from continuing operations increased 13 percent to 1,723 billion USD. Organic sales increased by one percent. The increase in sales for the quarter reflected the following factors:

    • Acquisitions added 13 percent
    • Volume and mix added one percent
    • Price and sales allowances added one percent
    • Increased promotional spending subtracted one percent
    • Currency subtracted one percent

    Net earnings from continuing operations for the quarter were 117 million USD or 0,37 USD per share, compared with earnings of 126 million USD or 0,39 USD per share, in the prior year. In the fourth quarter of fiscal 2013, the company recorded restructuring charges and restructuring-related costs in cost of products sold associated with initiatives to improve its U.S. supply chain cost structure and to increase asset utilization across its U.S. thermal plant network; to expand access to manufacturing and distribution capabilities in Mexico; to improve its Pepperidge Farm bakery supply chain cost structure; and to reduce overhead costs in North America. The aggregate impact of the restructuring initiatives was 19 million USD after tax or 0,06 USD per share, on earnings from continuing operations. In the fourth quarter of fiscal 2012, the company recorded transaction costs associated with the acquisition of Bolthouse Farms. The impact in the year-ago quarter from the acquisition transaction costs was three million USD after tax or 0,01 USD per share. Excluding items impacting comparability in both periods, adjusted net earnings from continuing operations increased five percent to 136 million USD compared with 129 million USD in the prior year´s quarter and adjusted net earnings per share from continuing operations increased eight percent to 0,43 USD compared with 0,40 USD in the year-ago quarter.

    Fourth-Quarter Financial Details – Continuing Operations

    • Gross margin was 36,2 percent compared with 39,0 percent a year ago. Excluding restructuring-related charges, adjusted gross margin in the current quarter was 36,7 percent. The decline in gross margin was primarily attributable to the acquisition of Bolthouse Farms, which operates with a lower gross margin structure. Excluding the acquisition, the impact of cost inflation was mostly offset by productivity improvements.
    • Marketing and selling expenses of 191 million USD were comparable to the prior year. In the current quarter, lower advertising and consumer promotion expense was offset by the addition of Bolthouse Farms expenses.
    • Administrative expenses increased 32 million USD to 195 million USD, primarily due to higher incentive compensation costs compared to below-targeted levels in the year-ago quarter and to the addition of Bolthouse Farms.
    • Ebit was 178 million USD compared with 203 million USD in the prior-year quarter. Excluding restructuring and restructuring-related charges, as well as acquisition transaction costs, adjusted Ebit of 208 million USD was comparable to the year-ago quarter. The acquisition of Bolthouse Farms contributed 17 million USD of Ebit in the current quarter. Excluding the impact of acquisitions, adjusted Ebit declined primarily due to higher administrative expenses.
    • Net interest expense increased five million USD to 30 million USD, reflecting a higher debt level due to the acquisition of Bolthouse Farms, partially offset by lower interest rates.
    • The tax rate in the quarter was 22,3 percent compared with 30,3 percent in the prior year. Excluding items impacting comparability in both periods, the current quarter´s adjusted tax rate was 24,7 percent compared to 30,6 percent in the prior year. The decline in the effective tax rate was primarily due to lower state taxes and an increase in the U.S. manufacturing deduction.

    Fourth-Quarter Results – Discontinued Operations

    Sales from discontinued operations were 98 million USD compared to 94 million USD in the year-ago quarter. Adjusted Ebit for the quarter from discontinued operations was nine million USD compared to no Ebit in the prior-year quarter.

    Net loss from discontinued operations for the quarter was 275 million USD or 0,87 USD per share, compared with net earnings from discontinued operations of one million USD in the prior year. Fourth-quarter results from discontinued operations reflect a non-cash impairment charge of 396 million USD (263 million USD after tax or 0,83 USD per share) to reduce the carrying value of the intangible assets of the European simple meals business, as well as an 18-million USD tax charge (0,06 USD per share) that is related to the potential sale. Excluding items impacting comparability in the current period, adjusted net earnings from discontinued operations were six million USD and adjusted net earnings per share from discontinued operations were 0,02 USD, compared with net earnings from discontinued operations of one million USD in the year-ago quarter.

    Fourth-Quarter Results – Combined Continuing and Discontinued Operations

    Combining continuing and discontinued operations, adjusted sales increased 13 percent to 1,821 billion USD from 1,613 billion USD. Combined adjusted Ebit from continuing and discontinued operations increased four percent to 217 million USD. Adjusted net earnings per share increased ten percent to 0,45 USD compared with 0,41 USD in the year-ago quarter.

    Full-Year Results – Continuing Operations

    Sales from continuing operations for the fiscal year were 8,052 billion USD, an increase of twelve percent from the year-ago period with organic sales up two percent. The increase in sales for the period reflected the following factors:

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

    Net earnings from continuing operations for the fiscal year were 689 million USD or 2,17 USD per share, compared with 734 million USD or 2,29 USD per share, in the year-ago period. Results from continuing operations were impacted by restructuring and restructuring-related costs and acquisition transaction costs. Excluding items impacting comparability in both years, adjusted net earnings from continuing operations increased six percent to 786 million USD from 741 million USD in the prior year. Adjusted net earnings per share from continuing operations increased seven percent to 2,48 USD from 2,31 USD in the year-ago period.

    Full-Year Financial Details – Continuing Operations

    • Gross margin was 36,2 percent compared with 39,2 percent a year ago. Excluding restructuring-related charges, adjusted gross margin for the fiscal year was 37,3 percent. The decline in gross margin was mostly attributable to the acquisition of Bolthouse Farms.
    • Marketing and selling expenses increased six million USD to 947 million USD. The increase was driven by the addition of Bolthouse Farms expenses and higher selling expenses, mostly offset by lower advertising and consumer promotion expenses.
    • Administrative expenses increased 97 million USD to 677 million USD, primarily due to the acquisition of Bolthouse Farms and higher incentive compensation costs.
    • Ebit was 1,080 billion USD compared with 1,155 billion USD in the prior year. Excluding restructuring, restructuring-related charges and acquisition transaction costs, adjusted Ebit rose six percent to 1,232 billion USD primarily due to the acquisition of Bolthouse Farms, which contributed 63 million USD of Ebit in the year. Excluding acquisitions, adjusted Ebit was comparable to the prior year reflecting sales growth and lower marketing expenses, offset by higher administrative expenses, higher selling expenses, a lower gross margin percentage and higher research and development expenses.
    • The tax rate for the year was 28,8 percent compared with 31,0 percent in the prior year. Excluding items impacting comparability in both periods, the current year´s adjusted tax rate was 29,8 percent compared to 31,1 percent in the prior year. The decline in the effective tax rate was primarily due to lower state taxes, including the favorable resolution of certain matters and an increase in the U.S. manufacturing deduction.
    • Cash flow from operations was 1,019 billion USD compared with 1,120 billion USD in the prior year. The decline is primarily due to higher working capital requirements, partly offset by higher cash earnings.
    • Net debt rose to 4,1 billion USD, an increase of 1,665 billion USD, primarily due to funding the purchase of Bolthouse Farms and Plum Organics, partly offset by operating cash flow.

    Full-Year Results – Discontinued Operations

    Sales from discontinued operations were 532 million USD in both years. Adjusted Ebit from discontinued operations was 65 million USD compared to 60 million USD in the prior year.

    Net loss from discontinued operations for the fiscal year was 231 million USD or 0,73 USD per share, compared with net earnings from discontinued operations of 40 million USD or 0,12 USD per share, in the year-ago period. Fourth-quarter results from discontinued operations reflect a non-cash impairment to reduce the carrying value of intangible assets, as well as a tax charge that is related to the potential sale. Excluding items impacting comparability in both periods, adjusted net earnings from discontinued operations increased 19 percent to 50 million USD from 42 million USD in the prior year while adjusted net earnings per share from discontinued operations increased to 0,16 USD from 0,13 USD in the year-ago period.

    Full-Year Results – Combined Continuing and Discontinued Operations

    Combining continuing and discontinued operations, adjusted sales increased eleven percent to 8,584 billion USD from 7,707 billion USD. Combined adjusted Ebit from continuing and discontinued operations increased six percent to 1,297 billion USD from 1,227 billion USD in the prior year.

    Net earnings were 458 million USD or 1,44 USD per share, compared with 774 million USD or 2,41 USD per share, in the year-ago period. Excluding items impacting comparability, adjusted net earnings increased to 836 million USD and adjusted net earnings per share increased eight percent to 2,64 USD compared with 2,44 USD in the prior year.

    Summary of Fiscal 2013 Fourth-Quarter and Full-Year Results by Segment

    Full details for «U.S. Simple Meals», «International Simple Meals and Beverages», «U.S. Beverages», «Bolthouse and Foodservice» are available in Campbell´s news release on the company´s web server.

    Global Baking and Snacking

    Sales for Global Baking and Snacking were 570 million USD for the fourth quarter, an increase of three percent from a year ago. The rise in sales reflected the following factors:

    • Volume and mix added four percent
    • Price and sales allowances added three percent
    • Promotional spending subtracted two percent
    • Currency subtracted two percent

    Further details of sales results included the following:

    • «Pepperidge Farm» products posted strong sales growth, primarily driven by volume gains.
      • In cookies and crackers, sales increases were driven by strong gains in both «Goldfish» snack crackers and «Pepperidge Farm» cookies.
      • Sales of fresh bakery products increased double-digits versus the prior year, with volume gains across sandwich breads and rolls.
    • Sales at Arnott´s decreased primarily due to the negative impact of currency and sales declines in Australia, partially offset by gains in Indonesia.

    Operating earnings for the quarter were 84 million USD, an increase of one percent over the prior year. Operating earnings reflected the benefit of higher sales mostly offset by a lower gross margin percentage and increased administrative costs. The increase in operating earnings was driven by strong earnings gains in Pepperidge Farm, partially offset by a decline in Arnott´s and the unfavourable impact of currency.

    For the fiscal year, sales increased four percent to 2,273 billion USD. A breakdown of the change in sales follows:

    • Volume and mix added four percent
    • Price and sales allowances added two percent
    • Increased promotional spending subtracted two percent

    Operating earnings in the fiscal year increased one million USD to 316 million USD, reflecting growth in Pepperidge Farm mostly offset by lower earnings in Arnott´s.

    Unallocated Corporate Expenses

    Unallocated corporate expenses for the quarter were 55 million USD compared with 36 million USD a year ago. The current quarter included ten million USD of restructuring-related costs. The prior-year quarter included five million USD of transaction costs related to the Bolthouse Farms acquisition. Unallocated corporate expenses for the fiscal year were 260 million USD compared with 136 million USD in the prior year. The current year included 91 million USD of restructuring-related costs and ten million USD of transaction costs related to the Bolthouse Farms acquisition. The prior year included five million USD of transaction costs related to the Bolthouse Farms acquisition. The balance of the increase for the current quarter and fiscal year was primarily due to higher incentive compensation costs.

    Fiscal 2014 Guidance – Continuing Operations

    In fiscal 2014, the company expects continuing operations to grow sales by five to six percent, adjusted Ebit to grow by five to seven percent and adjusted EPS to grow by three to five percent. Fiscal 2014 comprises 53 weeks, one additional week compared to fiscal 2013, the benefit of which is expected to be offset by the anticipated impact of currency translation. The company expects acquisitions to contribute approximately 300 million USD to sales growth, one percent of Ebit growth and approximately 0,02 USD of EPS growth. In connection with the new business model in Mexico, reported sales and costs of products sold will be reduced by approximately 40 million USD. EPS growth reflects the impact of a significant increase in the tax rate, which is estimated to rise to approximately 31 to 32 percent.


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    Campbell: Reports Fourth-Quarter and Full-Year Results

    Camden / NJ. (csc) Campbell Soup Company reported its fourth-quarter and full-year results for fiscal 2012. The complete news release is available on the Company´s web server.

    Fourth-Quarter Overview

    • Reported Sales Were Comparable to Prior Year; Organic Sales Increased three Percent
    • Adjusted Earnings Before Interest and Taxes (Ebit) Declined ten Percent
    • U.S. Simple Meals Sales Grew seven Percent; Earnings Increased three Percent
    • In Global Baking and Snacking, U.S. Beverages and International Simple Meals and Beverages, Organic Sales Increased, While Earnings Declined

    Net earnings for the quarter ended July 29, 2012 were 127 million USD or 0,40 USD per share, compared with 100 million USD or 0,31 USD per share, in the prior year. The current quarter´s reported net earnings included transaction costs associated with the August 06, 2012 acquisition of Bolthouse Farms. The prior-year quarter´s reported net earnings included charges associated with the previously announced June 2011 restructuring program. Excluding items impacting comparability in both periods, adjusted net earnings decreased eight percent to 130 million USD compared with 141 million USD in the prior year´s quarter and adjusted net earnings per share decreased five percent to 0,41 USD compared with 0,43 USD in the year-ago quarter.

    Denise Morrison, Campbell´s President and Chief Executive Officer: «In the fourth quarter, we generated organic sales growth, with gains across most of our portfolio, including strong sales in U.S. Soup and U.S. Simple Meals. Retailers continue to respond favourably to our new product development and we have started shipping new products for fiscal 2013 launches».

    Morrison continued: «In fiscal 2012, we advanced our strategies to stabilize and profitably grow North America soup and simple meals, to expand our international presence and to drive growth in healthy beverages and baked snacks. In the first year of our strategic transition, we´ve renewed our focus on consumer insights, reinvigorated our brand building efforts and significantly improved our innovation pipeline. With the acquisition of Bolthouse Farms, we positioned Campbell for growth in the rapidly expanding packaged fresh market. While we have had some important accomplishments this year, we also recognize that driving change at Campbell will require a sharper focus on execution. Our strategic framework is a roadmap to drive disciplined and successful change at Campbell. We will continue to enhance and grow our core business, while we broaden our appeal with new consumer groups, new product platforms and new geographies».

    Morrison concluded: «As we begin the new fiscal year, we are confident that we will improve our sales and earnings trends. Today, we have provided specific growth ranges for fiscal 2013 sales, adjusted Ebit and adjusted EPS».

    Campbell´s fiscal 2013 guidance, which is included at the end of this news release, reflects improved trends in the company´s core business, as well as the impact of Bolthouse Farms.

    Fourth-Quarter Results

    For the fourth quarter, sales were 1’613 million USD, comparable to a year ago. Sales were impacted by the following factors:

  • Volume and mix added three percent
  • Price and sales allowances added three percent
  • Increased promotional spending subtracted three percent
  • Currency subtracted three percent

    Fourth-Quarter Financial Details

    • Gross margin was 38,5 percent compared with 39,8 percent a year ago. The decrease in gross margin percentage was primarily due to cost inflation and increased promotional spending, partly offset by productivity improvements and higher selling prices.
    • Marketing and selling expenses increased five percent to 206 million USD compared with 196 million USD in the prior year, primarily due to a six-percent increase in advertising and consumer promotion expenses, higher spending to support innovation efforts and higher selling expenses, partly offset by a decline due to currency.
    • Ebit was 203 million USD compared with 169 million USD in the prior-year quarter. Excluding items impacting comparability in both periods, adjusted Ebit decreased ten percent to 208 million USD compared with adjusted Ebit of 232 million USD a year ago. The decrease was primarily due to the decline in the gross margin percentage and higher marketing expenses, partly offset by an increase in sales volume.
    • The tax rate in the quarter was 29,8 percent compared with 31,5 percent in the prior year. Excluding items impacting comparability in both periods, the adjusted tax rate was 30,2 percent compared with 32,5 percent a year ago. The decrease was primarily due to lower taxes on foreign earnings in the current year.
    • Adjusted net earnings per share were 0,41 USD in the current quarter compared with adjusted net earnings per share of 0,43 USD in the prior-year quarter, a decrease of five percent. The decline reflected the lower Ebit, partially offset by the benefits of a lower tax rate and fewer shares outstanding.

    Full-Year Overview

    • Sales Were 7,7 Billion USD, Comparable to Prior Year
    • Adjusted Ebit Declined nine Percent
    • Sales Increases in Global Baking and Snacking, North America Foodservice and U.S. Beverages Were Offset by Declines in International Simple Meals and Beverages and U.S. Simple Meals
    • U.S. Simple Meals Earnings Were Comparable to a Year Ago
    • North America Foodservice Delivered Earnings Growth

    Full-Year Results

    Net earnings for the fiscal year were 774 million USD or 2,41 USD per share, compared with 805 million USD or 2,42 USD per share, in the year-ago period. Excluding items impacting comparability in both periods, adjusted net earnings declined seven percent to 783 million USD, compared to adjusted net earnings of 846 million USD. Adjusted net earnings per share declined four percent to 2,44 USD versus an adjusted 2,54 USD per share in the prior year. Sales for the fiscal year were 7,707 billion USD, comparable to the prior year. Sales were impacted by the following factors:

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

    Full-Year Financial Details

    • Gross margin was 38,8 percent compared with 40.2 percent a year ago. The decrease in gross margin percentage was due to cost inflation, increased promotional spending and unfavourable mix, partly offset by higher selling prices and productivity improvements.
    • Marketing and selling expenses increased 13 million USD to 1,02 billion USD, primarily due to a three-percent increase in advertising and consumer promotion expenses.
    • Administrative expenses decreased one million USD to 611 million USD.
    • Ebit was 1,212 billion USD compared with 1,279 billion USD in the prior year. Excluding items impacting comparability in both periods, adjusted Ebit declined nine percent to 1,227 billion USD, compared to adjusted Ebit of 1,342 billion USD in the prior year. The decrease was primarily due to the decline in gross margin percentage.
    • Adjusted net earnings per share were 2,44 USD compared with adjusted net earnings per share of 2,54 USD in the prior year, a decrease of four percent. The decline reflected the lower Ebit, partially offset by the benefit of fewer shares outstanding.
    • Cash flow from operations was 1,220 billion USD compared with 1,242 billion USD in the prior year. The decline reflected the impact of lower cash earnings, partly offset by lower pension contributions.
    • In fiscal 2012, Campbell repurchased 12,6 million shares for 412 million USD under its one billion USD strategic share repurchase program announced in June 2011 and the ongoing practice of buying back shares sufficient to offset those issued under incentive compensation plans.

    Global Baking and Snacking

    Sales for Global Baking and Snacking were 556 million USD for the fourth quarter, a decrease of one percent from a year ago. Organic sales increased two percent. A breakdown of the change in sales follows:

  • Volume and mix added three percent
  • Price and sales allowances added four percent
  • Increased promotional spending subtracted five percent
  • Currency subtracted three percent

    Further details of sales results included the following:

    • Sales of «Pepperidge Farm» products increased, driven by higher selling prices across the portfolio and volume gains, partially offset by increased promotional spending.
      • In cookies and crackers, sales benefited from double-digit growth in «Goldfish» snack crackers, partly offset by declines in cookies.
      • Bakery sales increased slightly, while sales of frozen products declined.
    • Excluding the unfavourable impact of currency, sales in Arnott´s were comparable to the prior year, as strong growth in Indonesia was offset by declines in Australia.

    Operating earnings for the quarter were 83 million USD compared with 92 million USD in the prior year. The decrease in operating earnings reflected lower earnings in Arnott´s, partly offset by growth in Pepperidge Farm. For the segment, the ten-percent decline was primarily due to increased promotional spending and cost inflation, partly offset by higher selling prices and productivity improvements.

    For the full year, sales increased two percent to 2,293 billion USD. A breakdown of the change in sales follows:

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

    Operating earnings decreased eleven percent to 315 million USD compared with 355 million USD in the year-ago period. The decline was primarily due to cost inflation, increased promotional spending and higher advertising, partly offset by higher selling prices and productivity improvements.


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    • Global Industry

    Campbell: Reports Fourth-Quarter and Full-Year Results

    Camden / NJ. (csc) Campbell Soup Company reported its results for the fourth quarter of fiscal 2011. Q4/2011 adjusted net earnings per share increased 30 percent to 0,43 USD. Full Year 2011 adjusted net earnings per share increased three percent to 2,54 USD, the company said in its statement.

    Fourth-Quarter Summary

    • Sales increased six percent to 1,607 billion USD; excluding currency, organic sales increased one percent
    • Strong performances in global Baking and Snacking, International Simple Meals and Beverages and North America Foodservice
    • U.S. Simple Meals Sales decreased eight percent

    Net earnings for the quarter ended July 31, 2011, were 100 million USD or 0,31 USD per share, compared with 113 million USD or 0,33 USD per share, in the prior year. The current quarter´s reported net earnings included charges associated with previously announced restructuring initiatives. Excluding these charges, adjusted net earnings increased 25 percent to 141 million USD and adjusted net earnings per share increased 30 percent to 0,43 USD in the current quarter.

    Denise Morrison, Campbell´s President and CEO: «Our fourth-quarter results were slightly better than expected. Our Global Baking and Snacking segment delivered strong performance with double-digit top- and bottom-line growth in the quarter. We also continued to make progress on our efforts to stabilize U.S. Simple Meals. But we have more work to do. As expected, lower promotional spending contributed to improved soup profits despite anticipated volume declines. We are confident that rebalancing our marketing investments toward consumer-focused brand building activities and developing a more robust innovation pipeline is the right approach to restore profitable growth over time. Sales of U.S. Beverages declined slightly in the quarter, compared to twelve-percent growth a year ago. Significant cost inflation and increased promotional spending depressed beverage profits in the quarter».

    Morrison concluded: «We are pleased to be finishing a very difficult fiscal year with some positive momentum and a new strategic direction. Fiscal 2012 will be a year of transition, as we build the foundation for a new Campbell with a renewed focus on meeting consumers´ needs. Implementing our new strategic framework will require substantial investment as we extend brand and product platforms through more consistent innovation in Simple Meals, Baked Snacks and Healthy Beverages, reinvigorate consumer marketing activities and drive international expansion in priority markets. Our team is beginning to implement these strategies and the company is energized by this change in direction».

    Fiscal 2012 Guidance

    Campbell´s fiscal year 2011 results were slightly ahead of the guidance issued in July 2011. As a result, the company is adjusting its forecasted 2012 growth rates. Campbell now expects net sales growth to be between zero and two percent, a decline in adjusted Ebit of between (nine) and (seven) percent and a decline in adjusted EPS of between (seven) and (five) percent from the adjusted base of 2,54 USD. These growth rates maintain planned fiscal 2012 levels of spending on innovation and brand building. The rates also exclude the impact in fiscal 2012 of the previously announced restructuring program.

    New Reportable Segments

    Beginning with the fourth quarter of fiscal 2011, Campbell will report the results of its operations in the following five reportable segments: U.S. Simple Meals, U.S. Beverages, Global Baking and Snacking, International Simple Meals and Beverages and North America Foodservice. Previously, U.S. Simple Meals and U.S. Beverages were combined and reported as U.S. Soup, Sauces and Beverages. Additionally, the Baking and Snacking segment has been renamed as Global Baking and Snacking and the International Soup, Sauces and Beverages segment has been renamed as International Simple Meals and Beverages. Segment results of prior periods have been revised to conform to the current presentation.

    Restructuring Program

    In June Campbell announced a series of initiatives to improve supply chain efficiency and reduce overhead costs across the company, as well as its plans to close its Moscow office and exit the Russian market. In the fourth quarter, Campbell recorded pre-tax restructuring costs of 63 million USD, 41 million USD after-tax or 0,12 USD per share, related to these initiatives.

    Fourth-Quarter Results

    For the fourth quarter, sales increased six percent to 1,607 billion USD. The increase in sales for the quarter reflected the following factors:

    • Volume and mix subtracted two percent
    • Price and sales allowances added two percent
    • Decreased promotional spending added one percent
    • Currency added five percent

    Fourth-Quarter Financial Details

    • Gross margin was 39,8 percent compared with 40,4 percent a year ago. The decline in gross margin percentage was primarily due to cost inflation and unfavourable mix, partly offset by productivity improvements, higher selling prices and reduced promotional spending.
    • Marketing and selling expenses decreased eleven percent to 196 million USD compared with 221 million USD in the prior year, primarily due to lower advertising expenditures.
    • Administrative expenses increased three million USD to 170 million USD, primarily due to the impact of currency.
    • Earnings before interest and taxes (Ebit) were 169 million USD compared with 187 million USD in the prior-year quarter. Excluding items impacting comparability, adjusted Ebit in the current quarter was 232 million USD. Adjusted Ebit increased 24 percent primarily due to earnings gains in *International Simple Meals and Beverages, North America Foodservice and Global Baking and Snacking and the favourable impact of currency.

    Adjusted net earnings per share were 0,43 USD in the current quarter compared with net earnings per share of 0,33 USD in the prior-year quarter, an increase of 30 percent. Earnings per share also benefited from fewer outstanding shares reflecting the impact of the company´s share repurchase programs.

    Full-Year Summary

    • Sales increased one percent to 7,719 billion
    • Global Baking and Snacking sales increased nine percent
    • U.S. Simple Meals sales decreased six percent
    • Earnings gains in Global Baking and Snacking, North America Foodservice and International Simple Meals and Beverages

    Full-Year Results

    Net earnings for the fiscal year were 805 million USD or 2,42 USD per share, compared with 844 million USD or 2,42 USD per share, in the year-ago period. Excluding items impacting comparability in both periods, adjusted net earnings declined two percent to 846 million USD compared to adjusted net earnings of 862 million USD and adjusted net earnings per share increased three percent to 2,54 USD in the current year versus an adjusted 2,47 USD per share in the prior year. Sales for the fiscal year were 7,719 billion USD, an increase of one percent from the prior year. The change in sales for the year reflected the following factors:

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

    Full-Year Financial Details

    • Gross margin was 40,2 percent compared with 41,0 percent a year ago. The decline in gross margin percentage was primarily due to cost inflation as well as higher plant costs and increased promotional spending, partly offset by productivity improvements and higher selling prices.
    • Marketing and selling expenses declined five percent to 1,007 billion USD, primarily due to lower advertising and lower selling expense, partly offset by the impact of currency.
    • Administrative expenses increased seven million USD to 612 million USD, primarily due to the impact of currency.
    • Ebit was 1,279 billion USD compared with 1,348 billion USD in the prior year. Excluding items impacting comparability in both periods, adjusted Ebit declined one percent to 1,342 billion USD compared to adjusted Ebit of 1,360 billion USD. The decrease was primarily due to lower earnings in U.S. Simple Meals and U.S. Beverages, partly offset by gains across the balance of the portfolio and the favourable impact of currency.
    • Cash flow from operations was 1,142 billion USD compared with 1,057 billion USD in the year-ago period. The current-year cash flow reflected the benefit of lower pension contributions and higher cash earnings, partly offset by higher working capital requirements.
    • In fiscal 2011, Campbell repurchased 21 million shares for 728 million USD under its June 2008 strategic share repurchase program and its practice of buying back shares sufficient to offset those issued under incentive compensation plans. The June 2008 strategic share repurchase program was completed during the fourth quarter of fiscal 2011. In June 2011, Campbell announced that its Board of Directors authorized a new share repurchase program, with no expiration date, to purchase up to one billion USD of its outstanding shares.

    Summary of Fiscal 2011 Q4 and FY Results by Segment

    U.S. Simple Meals: Sales for U.S. Simple Meals were 431 million USD for the fourth quarter, a decrease of eight percent compared to the year-ago period. A breakdown of the change in sales follows:

    • Volume and mix subtracted eleven percent
    • Decreased promotional spending added three percent

    U.S. Soup sales declined nine percent in the quarter. Sales volumes were negatively impacted by reduced promotional spending and higher selling prices as the company continued to transition to improved price realization. Soup sales, especially condensed varieties, were also negatively impacted by unfavourable movements in customer inventory levels.

    • Sales of «Campbell´s» condensed soups decreased ten percent, with declines in both eating and cooking varieties.
    • Sales of ready-to-serve soups decreased five percent, reflecting declines in «Select Harvest» canned soups and microwavable soups.
    • Broth sales declined eleven percent.

    Sales of «Prego» pasta sauce declined due to continued competitive merchandising and competitive new items. Sales of «Pace» Mexican sauce declined largely due to share losses to private label. Operating earnings were 101 million USD compared with 97 million USD in the prior-year period. The increase in operating earnings was primarily due to lower marketing and selling expenses and an increase in gross margin percentage, partially offset by lower sales volumes. For the full year, U.S. Simple Meals sales decreased six percent to 2,751 billion USD. A breakdown of the change in sales follows:

    • Volume and mix subtracted five percent
    • Increased promotional spending subtracted one percent

    For the full year, U.S. soup sales declined six percent reflecting a nine-percent decrease in ready-to-serve soups and a 4-percent decrease in condensed soups. Sales of broth decreased one percent. Sales of «Prego» pasta sauce and «Pace» Mexican sauce both declined. Operating earnings were 657 million USD compared with 737 million USD in the year-ago period, a decrease of eleven percent. The decline in operating earnings was primarily due to lower sales and a reduced gross margin percentage partly offset by lower marketing and selling expenses.

    U.S. Beverages: Sales for U.S. Beverages were 176 million USD for the fourth quarter, down one percent compared to the year-ago period. A breakdown of the change in sales follows:

    • Volume and mix added three percent
    • Price and sales allowances subtracted one percent
    • Increased promotional spending subtracted three percent

    Beverage sales declined slightly compared to strong growth in the year-ago period in which sales increased twelve percent. Sales of «V8» vegetable juice declined due to increased competitive activity, while sales of «V8 V-Fusion» juice and «V8 Splash» juice drinks increased. Sales of «V8 V-Fusion» juice benefited from the launch of «V-Fusion + Tea», several new flavour varieties and eight ounces slim cans. Operating earnings declined 29 percent to 30 million USD compared with 42 million USD in the year-ago period. The decrease in operating earnings was primarily due to significant cost inflation, particularly ingredients and packaging costs and increased promotional spending in response to increased competitive activity, partly offset by productivity improvements. For the full year, sales for U.S. Beverages were 759 million USD, comparable to the prior year. A breakdown of the change in sales follows:

    • Volume and mix added two percent
    • Increased promotional spending subtracted two percent

    Sales of «V8 Splash» juice drinks and «V8 V-Fusion» juice increased, while sales of «V8» vegetable juice declined. Operating earnings were 182 million USD compared with 206 million USD in the prior year. Earnings decreased twelve percent primarily due to increased promotional spending.

    Global Baking and Snacking: Sales for Global Baking and Snacking were 559 million USD in the fourth quarter, an increase of 17 percent from a year ago. A breakdown of the change in sales follows:

    • Volume and mix added three percent
    • Price and sales allowances added five percent
    • Increased promotional spending subtracted one percent
    • Currency added ten percent

    Further details of sales results include the following:

    • Sales at Pepperidge Farm increased, reflecting higher selling prices and volume gains.
      • In cookies and crackers, sales increases were fuelled by solid gains in «Goldfish» snack crackers, the launch of «Milano Melts» cookies and growth in «Chocolate Chunk Crispy» cookies.
      • Sales of fresh bakery products were comparable to the prior year.
      • Sales of frozen products increased, driven by gains in Garlic Toast and the launch of Artisan Stone Baked rolls.
    • Sales at Arnott´s increased due to currency and sales gains in savory crackers, led by «Shapes» and «Tim Tam» chocolate biscuits.

    Operating earnings rose to 92 million USD compared with 73 million USD in the prior-year period, an increase of 26 percent. The increase in operating earnings was primarily due to growth at Arnott´s and the favourable impact of currency, partially offset by a decline at Pepperidge Farm. For the full year, sales increased nine percent to 2,156 billion USD. A breakdown of the change in sales follows:

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

    Operating earnings grew ten percent to 355 million USD compared with 322 million USD in the prior year. The increase in operating earnings was primarily due to the impact of currency and volume-driven growth at both Pepperidge Farm and Arnott´s.

    International Simple Meals and Beverages: Sales for International Simple Meals and Beverages were 316 million USD for the fourth quarter, an increase of twelve percent compared with a year ago. A breakdown of the change in sales follows:

    • Volume and mix subtracted three percent
    • Price and sales allowances added one percent
    • Decreased promotional spending added two percent
    • Currency added twelve percent

    Excluding the impact of currency, higher sales in Europe and Canada were offset by declines in the Asia Pacific region and Latin America.

    • In Europe, sales increased primarily due to the favourable impact of currency and increased sales in Belgium.
    • In the Asia Pacific region, sales increased due to currency, partially offset by lower soup sales in Australia.
    • In Canada, sales increased primarily due to currency and increased sales of soup.

    Operating earnings were 24 million USD compared with six million USD in the year-ago period. The 18-million USD increase in operating earnings was primarily due to gains in Canada, reduced spending in Russia and the favourable impact of currency. For the full year, sales increased three percent to 1,463 billion USD from 1,423 billion USD. A breakdown of the change in sales follows:

    • Increased promotional spending subtracted one percent
    • Currency added four percent

    Excluding the impact of currency, sales declines in Latin America and Canada were partly offset by gains in the Asia Pacific region. Operating earnings rose to 185 million USD compared with 161 million USD in the year-ago period, an increase of 15 percent. The increase in operating earnings was primarily due to growth in the Asia Pacific region, the impact of currency and reduced spending in Russia.

    North America Foodservice: Sales were 125 million USD for the fourth quarter, an increase of ten percent compared with a year ago. A breakdown of the change in sales follows:

    • Volume and mix added one percent
    • Price and sales allowances subtracted one percent
    • Decreased promotional spending added eight percent
    • Currency added two percent

    Operating earnings increased to 16 million USD from three million USD. The increase in operating earnings was primarily driven by reduced promotional spending and productivity improvements. For the full year, sales increased to 590 million USD from 578 million USD. A breakdown of the change in sales follows:

    • Volume and mix subtracted one percent
    • Decreased promotional spending added two percent
    • Currency added one percent

    Operating earnings increased 49 percent to 82 million USD compared with 55 million USD in the year-ago period. The increase in operating earnings was primarily driven by reduced promotional spending, productivity improvements in excess of inflation and lower administrative expenses.


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    Global Industry

    Campbell: Reports Fourth-Quarter and Full-Year Results

    Camden / NJ. (csc) Campbell Soup Company reported its fiscal 2010 results. Fourth-Quarter Summary: Sales decreased one percent to 1’518 million USD. U.S. beverage sales increased twelve percent. U.S. soup sales decreased five percent.

    Full-Year Summary: Sales increased one percent to 7’676 million USD. Significant improvement in gross margin percentage driven by increased productivity. Adjusted earnings before interest and taxes increased seven percent. Generated more than one billion USD in cash flow from operations.

    Net earnings for the quarter ended August 01, 2010, were 113 million USD, or 0,33 USD per share, compared with 69 million USD or 0,20 USD per share, in the prior year. Excluding items impacting comparability, all related to fiscal 2009, adjusted net earnings increased six percent in the quarter from an adjusted 107 million USD in the prior-year quarter. Adjusted net earnings per share increased ten percent in the current quarter from 0,30 USD in the year-ago quarter. Douglas R. Conant, Campbell´s President and CEO:

    «In a challenging year, we delivered strong earnings growth, overcoming softer-than-expected sales, particularly in our U.S. soup business. We had another year of strong cash flow performance, generating more than one billion USD in cash flow from operations. For the year, we expanded gross margins through supply chain productivity improvements and previously announced cost-savings initiatives. By effectively managing our margins in a tough economic environment, we have set the stage for next year and positioned the company for growth through continued innovation, category leading marketing spending and competitive pricing. I am confident that we have the right strategies to drive growth across our strong portfolio of healthy beverages, baked snacks and simple meals. In healthy beverages, we will build on our track record of innovation and continue our effective marketing efforts. In baked snacks, we have a full slate of innovation across our portfolio with exciting new products for Pepperidge Farm and Arnott´s. In U.S. soup, we have significant plans to enhance our condensed soups, strengthen our competitiveness in ready-to-serve soups and introduce a new advertising campaign to support the entire U.S. portfolio of ´Campbell´s´ soup brands and to help drive category growth».

    Fiscal 2011 Guidance

    In fiscal 2011, Campbell expects sales growth of two to three percent and adjusted earnings growth before interest and taxes (Ebit) of four to five percent. These growth rates are slightly below the company´s long-term growth targets, reflecting the challenging economic and consumer conditions in the marketplace. Despite these conditions, Campbell expects fiscal 2011 EPS growth to be within its long-term target range of five to seven percent from the fiscal 2010 adjusted base of 2,47 USD.

    Fourth-Quarter Results

    For the fourth quarter, sales decreased one percent to 1’518 million USD. The decrease in sales reflected the following factors:
    Increased promotional spending subtracted two percent
    Currency added one percent

    Fourth-Quarter Financial Details

    • Gross margin was 40,4 percent, compared with 41,6 percent a year ago. The prior year included a favourable net adjustment of 14 million USD related to commodity hedging. After adjusting for this item, the gross margin percentage for the prior-year quarter was 40,6 percent. The decrease in gross margin percentage was primarily due to increased promotional spending and cost inflation, partially offset by productivity improvements.
    • Marketing and selling expenses increased six percent to 221 million USD, primarily due to increased advertising expense.
    • Administrative expenses decreased 17 million USD to 167 million USD, primarily due to lower incentive compensation costs.
    • Ebit was 187 million USD compared with 145 million USD in the prior-year quarter. Excluding items impacting comparability, adjusted Ebit in the prior-year quarter was 198 million USD. Adjusted Ebit decreased six percent primarily due to increased promotional spending and cost inflation, partially offset by productivity improvements and lower administrative expense.
    • The effective tax rate was 29,8 percent compared with 43,4 percent in the prior-year quarter. Excluding items impacting comparability, the prior-year effective tax rate was 38,9 percent. The decrease in the tax rate was primarily due to additional tax expense in the prior year associated with the repatriation of foreign earnings.
    • Net earnings per share were 0,33 USD in the current quarter compared with adjusted net earnings per share of 0,30 USD in the prior-year quarter, an increase of ten percent. The increase was primarily due to a lower effective tax rate in the current year and the benefit from a reduction in weighted average diluted shares outstanding.

    Full-Year Results

    Net earnings for the fiscal year were 844 million USD or 2,42 USD per share, compared with 736 million USD or 2,05 USD per share a year ago. Excluding all items impacting comparability in both periods, adjusted net earnings increased nine percent to 862 million USD compared with 794 million USD in the prior year, and adjusted net earnings per share increased twelve percent to 2,47 USD in the current year compared with 2,21 USD in the prior year.

    Sales were 7’676 million USD, an increase of one percent. The change in sales for the year reflected the following factors:
    Volume and mix subtracted one percent
    Price and sales allowances added one percent
    Increased promotional spending subtracted two percent
    Currency added three percent

    Full-Year Financial Details

    • Gross margin was 41,0 percent, compared with 39,9 percent a year ago. The prior year included 22 million USD of costs related to initiatives to improve operational efficiency and long-term profitability. After adjusting for this item, the gross margin percentage for the prior year was 40,2 percent. The increase in gross margin percentage was primarily due to productivity improvements, partially offset by cost inflation.
    • Marketing and selling expenses decreased 19 million USD to 1’058 million USD, primarily due to lower advertising and consumer promotion costs, partially offset by the impact of currency.
    • Administrative expenses increased to 605 million USD from 591 million USD a year ago, primarily due to the impact of currency; higher compensation and benefit costs, including pension expense; and inflation, partially offset by expense-management efforts.
    • Ebit was 1’348 million USD compared with 1’185 million USD in the prior year. Excluding items impacting comparability in both years, adjusted Ebit was 1’360 million USD in the current year versus 1’274 million USD a year ago. Adjusted Ebit increased seven percent primarily due to improved gross margin performance and the impact of currency, partially offset by lower sales volume.
    • Cash flow from operations was 1’057 million USD compared with 1’166 million USD in the year-ago period. The current-year cash flow reflected a 260 million USD contribution to a Campbell U.S. pension plan, mostly offset by improvements in working capital and higher earnings.
    • In fiscal 2010, Campbell repurchased 14 million USD shares for 472 million USD under its strategic share repurchase program announced in June 2008 and the company´s ongoing practice of buying back shares sufficient to offset those issued under incentive compensation plans.

    Summary of Fiscal 2010 Fourth-Quarter and Full-Year Results by Segment:

    U.S. Soup, Sauces and Beverages

    Sales for U.S. Soup, Sauces and Beverages were 644 million USD for the fourth quarter, a decrease of one percent compared with a year ago. The change in sales reflected the following factors:
    Volume and mix added one percent
    Price and sales allowances added one percent
    Increased promotional spending subtracted three percent

    Soup sales for the quarter decreased five percent, with sales of both condensed and ready-to-serve soups declining seven percent, reflecting increased promotional spending, while broth sales increased nine percent.

    Beverage sales increased twelve percent driven by significant growth across the entire «V8» portfolio.

    Sales of «Prego» pasta sauce and «Pace» Mexican sauce declined.

    Operating earnings were 139 million USD, compared with 148 million USD in the prior-year period. The decrease in operating earnings was primarily due to increased promotional spending, partly offset by productivity improvements.

    For the full year, U.S. Soup, Sauces and Beverages sales decreased two percent to 3’700 million USD. A breakdown of the change in sales follows:
    Volume and mix subtracted one percent
    Price and sales allowances added one percent
    Increased promotional spending subtracted two percent

    For the full year, U.S. Soup sales decreased four percent.

    • Sales of «Campbell´s» condensed soups decreased two percent. Sales of condensed cooking varieties increased, benefiting from growth «ofin-home» eating occasions. Sales of eating varieties declined.
    • Sales of ready-to-serve soups declined nine percent. Reflecting weak category trends, sales of both canned and microwavable varieties declined.
    • Broth sales increased three percent, also benefiting from the growth of in-home eating occasions and from consumer demand for 100 percent natural product offerings.

    Beverage sales increased four percent driven by double-digit volume gains in the second half of the fiscal year.

    • «V8 V-Fusion» juice sales increased double digits due to increased advertising and successful new item launches, including Cranberry-Blackberry and Acai Mixed Berry Light varieties, as well as new 8-ounce slim can packaging.
    • Sales of «V8 Splash» juice drinks increased, while sales of «V8» vegetable juice declined.

    «Prego» pasta sauce sales increased, reflecting the growth of «Prego» Heart Smart varieties, while sales of «Pace» Mexican sauce declined.

    Operating earnings were 943 million USD, compared with 927 million USD a year ago. The increase in operating earnings was primarily due to improved gross margin performance and lower advertising, partially offset by lower sales.

    Baking and Snacking

    Sales for Baking and Snacking were 479 million USD in the fourth quarter, an increase of three percent from a year ago. The change in sales reflected the favourable impact of currency.

    Increased sales in the Indonesia biscuits business were offset by a decline in Pepperidge Farm. In Australia, sales were comparable to the year-ago period, as higher volumes were offset by increased promotional spending.

    For the quarter, operating earnings were 73 million USD, compared with 69 million USD in the prior-year period. The increase in operating earnings was due to the favourable impact of currency.

    For the full year, sales increased seven percent to 1’975 million USD. A breakdown of 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

    Further details of sales results included the following:

    • Sales of Pepperidge Farm were comparable to a year ago, as the acquisition of Ecce Panis Inc. and volume gains were offset by increased promotional spending.
      • Excluding the acquisition, sales from the bakery business declined, reflecting increased promotional spending partly offset by volume gains.
      • In the cookies and crackers business, sales were comparable to a year ago, as solid gains in «Goldfish» snack crackers were offset by a decline in cookies.
    • In Australia, sales increased due to currency and growth in Arnott´s, driven by gains in «Tim Tam» chocolate biscuits and «Shapes» savory crackers.

    Operating earnings were 322 million USD, compared with 262 million USD in the prior year. The prior year included three million USD in costs related to the restructuring program. The increase in operating earnings was due to the favourable impact of currency and earnings growth in both Pepperidge Farm and Arnott´s.

    International Soup, Sauces and Beverages

    Sales for International Soup, Sauces and Beverages were 281 million USD for the fourth quarter, a decrease of three percent compared with a year ago. The change in sales reflected the following factors:
    Volume and mix subtracted one percent
    Increased promotional spending subtracted three percent
    Currency added one percent

    Sales decreased primarily due to declines in Europe and Canada, partially offset by gains in the Asia Pacific region and the favourable impact of currency.

    Operating earnings were six million USD, compared with a loss of 48 million USD in the year-ago period. The prior-year period included an impairment charge of 67 million USD related to certain European trademarks. Excluding the impairment charge, operating earnings decreased primarily due to declines in Canada and Europe, partially offset by margin growth in Asia Pacific.

    For the full year, sales increased five percent to 1’423 million USD. A breakdown of the change in sales follows:
    Volume and mix subtracted one percent
    Price and sales allowances added two percent
    Increased promotional spending subtracted two percent
    Currency added seven percent
    Divestitures subtracted one percent

    Excluding the impact of currency and divestitures, declines in Europe and Canada were partly offset by gains in the Asia Pacific region.

    • In Europe, sales declined, reflecting lower sales in Germany and the impact of divestitures, partly offset by the favourable impact of currency.
    • In Asia Pacific, sales increased due to currency and volume-driven gains in Japan, Australia and Malaysia.
    • In Canada, sales increased due to the impact of currency, partially offset by lower sales volume of ready-to-serve soups.

    Operating earnings were 161 million USD, compared with 69 million USD a year ago. Excluding the prior-year impairment charge of 67 million USD, the increase in operating earnings was primarily driven by the favourable impact of currency and growth in Europe as well as the Asia Pacific region, partially offset by declines in Canada.

    North America Foodservice

    Sales were 114 million USD for the fourth quarter, a decrease of seven percent compared with a year ago. A breakdown of the change in sales follows:
    Volume and mix subtracted six percent
    Increased promotional spending subtracted three percent
    Currency added two percent

    Operating earnings were three million USD compared with zero USD in earnings in the prior-year quarter. The increase was primarily due to cost-reduction initiatives.

    For the full year, sales were 578 million USD compared with 599 million USD in the prior year, a decline of four percent. A breakdown of the change in sales follows:
    Volume and mix subtracted five percent
    Price and sales allowances added one percent
    Increased promotional spending subtracted one percent
    Currency added one percent

    Sales declined primarily due to continued weakness in the food service sector.

    Operating earnings were 43 million USD, compared with 34 million USD in the prior year. The current year included a twelve million USD restructuring charge, while the prior year included 19 million USD in restructuring-related costs. Excluding these items, operating earnings increased slightly.

    Unallocated Corporate Expenses

    Unallocated corporate expenses increased to 34 million USD in the current quarter from 24 million USD a year ago. The prior year included a favourable net adjustment of 14 million USD related to commodity hedging. Unallocated corporate expenses for the full year were 121 million USD versus 107 million USD in the prior year. The increase primarily reflected foreign currency gains recorded in the prior year and higher equity-related benefit costs in the current year (Source).


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