Campbell Soup Co. reports 9% rise in net earnings

by Staff
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CAMDEN, N.J. — In the second quarter ended Jan. 29, Campbell Soup Co. reported net earnings of $254 million, equal to 62c per share on the common stock, which amounted to a 9% increase from $235 million, or 57c per share, in the same period last year.

Net sales for the quarter rose 3% to $2,281 million. Price and sales allowances added 4% to sales while volume and mix added 1%. Currency subtracted 2%.

"Our solid performance this quarter was consistent with our expectations," said Douglas R. Conant, president and chief executive officer of Campbell. "Our top-line growth was driven by strong increases across our U.S. soup business. Both our condensed portfolio and broth delivered good growth, while our ready-to-serve soups showed significant improvement following a weak first quarter."

Operating earnings for U.S. Soups, Sauces and Beverages were $242 million, an increase of 12% from $216 million in the same period last year. Sales were $1,018 million, up 6% from last year.

Sales of Campbell’s condensed soup rose 6% behind continued growth in children’s varieties. Ready-to-serve soup sales rose 9%, driven by the introduction of restaurant style Campbell’s Select Gold Label soups. Chunky chili canned sales declined.

The convenience soup platform achieved double-digit growth with Campbell’s Chunky and Campbell’s Select in microwavable bowls.

Swanson broth sales grew, driven by strong holiday merchandising activity. V8 vegetable juice recorded double-digit sales increase and the new 100% fruit juice beverage V8 V-Fusion, released during the quarter, was well received. Prego pasta sauce sales and Pace Mexican sauce sales also increased.

The company also announced that in order to offset cost inflation it will increase prices in the U.S Soups, Sauces and Beverages business by 2.3%. The price increase will be effective Feb. 27. Approximately 40% of the company’s stock-keeping units will be affected, and the price increase does not include any of the company’s Chunky or Select Ready-to-serve Soup products.

The Baking and Snacking unit posted operating income of $40 million, down 15% from $47 million in the same period last year. Earnings were impacted by declines in the biscuit business in Indonesia, as well as declines in the snack foods business in Australia.

Sales also were down, dropping 1% to $429 million, compared with $433 million in the same period last year.

Pepperidge Farm bakery sales grew in the quarter driven by whole grain bread, muffins and bagels, as well as strong demand for stuffing during the holidays.

Operating earnings for International Soup and Sauces increased 16% to $81 million, while sales fell 4% to $483 million.

The company confirmed its fiscal 2006 guidance for earnings per share to increase between 5% and 7% from the adjusted fiscal year 2005 base of $1.64, which reflects the impact of expensing all stock-based compensation.

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