Campbell: Reports Third Quarter Results

Camden / NJ. (bw) Campbell Soup Company reported net earnings for the quarter ended May 03, 2009 of 174 million USD, or 0,49 USD per share, compared to 532 million USD, or 1,40 USD per share, in the prior year. Excluding items impacting comparability, adjusted net earnings were 171 million USD in the current quarter compared to adjusted net earnings of 165 million USD in the prior year´s quarter. Adjusted net earnings per share were 0,48 USD in the current quarter compared to adjusted net earnings per share of 0,43 USD in the prior year´s quarter, an increase of twelve percent. Reflecting a stronger U.S. Dollar, adjusted net earnings per share for the quarter were negatively impacted by 0,04 USD due to currency translation.

President´s and CEO´s Comment of the Results

Douglas R. Conant, Campbell´s President and Chief Executive Officer: «We delivered strong earnings growth this quarter. Reflecting our previous pricing actions and ongoing productivity improvements, gross margin performance improved versus the prior year, as expected. Following increased spending in the first half to launch new products, we reduced marketing expenses, as planned, particularly in U.S. Soup. Despite softer sales in the quarter, year to date we´ve delivered one of the strongest U.S. Soup sales performances in years, with sales up six percent. Consumers continued to view soup as a simple, nourishing and affordable meal. In particular, condensed cooking soups provided strong growth, as our value marketing message resonated with consumers. We also are pleased with the introduction and ongoing performance of ‘Campbell´s Select Harvest’ and ‘Campbell´s V8’ ready-to-serve soups and ‘Swanson’ stock».

Conant continued: «Beyond U.S. Soup, our Sauces business turned in a stellar quarter with double-digit sales growth and very strong earnings growth. Pepperidge Farm also delivered double-digit sales gains in ‘Goldfish’ snack crackers and ‘Milano’ cookies. On the other hand, our beverage and North America Foodservice businesses have been negatively impacted by the poor economy. Internationally, we delivered solid performance in Asia Pacific, behind double-digit sales gains in the Australian soup business. However, our European business declined in the face of a very challenging operating environment. In emerging markets, we continued to build our capabilities in Russia and China». Conant concluded: «We are successfully managing our way through the challenging economic conditions, we are gaining momentum in our key areas of focus and we are on track to deliver solid full-year results».

Fiscal 2009 Guidance

On a currency neutral basis, the company expects to deliver sales growth, excluding the negative impact of one less week in the fiscal year and divestitures, within its long-term target range of between three and four percent; adjusted earnings before interest and taxes (EBIT) growth slightly below its long-term growth target of between five and six percent, reflecting the impact of one less week, higher marketing spending and increased investment spending in Russia and China. On a currency neutral basis, Campbell now expects growth in adjusted net earnings per share (EPS) to exceed the five to seven percent range from the fiscal 2008 adjusted base of 2,09 USD. The company expects its fiscal 2009 sales, EBIT and EPS growth rates will be negatively impacted by approximately five percentage points as a result of currency translation.

Summary of Fiscal 2009 Third Quarter and
Year-To-Date Results by Segment «Baking and Snacking» (only)

Sales for Baking and Snacking were 431 million USD, a decrease of 14 percent from a year ago. A breakdown of the change in sales follows:
Volume and mix subtracted two percent.
Price and sales allowances added six percent.
Increased promotional spending subtracted one percent.
Currency subtracted nine percent.
Divestitures subtracted eight percent.

Further details of sales results include the following:

• Sales of Pepperidge Farm Incorporated (Norfolk / CT) products increased, driven by double-digit growth in «Goldfish» snack crackers and in «Milano» cookies, as well as the introduction of Granola cookies.
• On a reported basis, the sales from Arnott´s Biscuits Holdings (Sidney / AU) declined due to the divestiture of certain salty snack foods brands, the discontinuance of the private label biscuit and industrial chocolate businesses associated with the closing of a production facility in Australia and the unfavorable impact of currency. Excluding these factors, sales increased, driven by solid growth in both savory and sweet biscuit products with especially strong growth in Indonesia.

Operating earnings were 57 million USD compared with a loss of 92 million USD in the prior-year period. In connection with the previously announced restructuring initiative, the current quarter included one million USD in costs compared to 144 million USD in the prior year´s quarter. The remaining increase in operating earnings was due to gains in Pepperidge Farm and Arnott´s, partially offset by the unfavorable impact of currency.

For the first nine months, sales decreased ten percent to 1,38 billion USD. A breakdown in the change in sales follows:
Volume and mix subtracted two percent.
Price and sales allowances added eight percent.
Increased promotional spending subtracted two percent.
Currency subtracted six percent.
Divestitures subtracted eight percent.

Operating earnings were 193 million USD compared to 48 million USD in the year-ago period. In connection with the previously announced restructuring initiative, the current year included three million USD in accelerated depreciation and other exit costs, compared to a 144 million USD restructuring charge in the prior year. The remaining increase was primarily due to significant growth in Arnott´s, partially offset by the negative impact of currency.

Info: Campbell Reports Third Quarter Results – Adjusted Net Earnings Per Share Increased 12 Percent to $0.48. Raises 2009 Adjusted EPS Guidance (complete press release).