Successful growth strategy helps boost Campbell '06 income

by Staff
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CAMDEN, N.J. — The ability to successfully pursue long-term goals for growth helped Camden-based Campbell Soup Co. achieve increased earnings for the year ended July 30. Net income for the year rose 8% to $766 million equal to $1.88 per share on the common stock, compared with $707 million, or $1.73 per share, in fiscal 2005.

Net sales for the year totaled $7,343 million, up 4% from $7,072, million the previous year.

Commenting on the year, Douglas R. Conant, president and chief executive officer of Campbell, said the company’s strong financial performance will allow it to pursue its growth initiatives and position itself for future success.

"We are also very pleased with our performance this year on several key financial measures," Mr. Conant said. "We improved our gross margin, consistent with our goal for the year. We continued to generate outstanding cash flow from operations, achieving a record level in fiscal 2006. This strong cash flow enabled us to pay down debt, buy back shares and increase our dividend while continuing to invest in our three core growth initiatives — lower sodium soup, shelf stable premium soup, and premium refrigerated soup."

In the U.S. Soup, Sauces and Beverages division, operating earnings totaled $815 million, up 9% from $747 million. Sales increased 5% to $3,257,000 as volume and mix subtracted 1% and price and sales allowance contributed 6%.

For the year, total U.S. soup sales increased 4%, with condensed soup sales up 5%, ready-to-serve soup sales up 1% and broth sales up 11%.

For the full year, operating earnings in the Baking and Snacking division totaled $187 million down 6% from $198 million in 2005.

For fiscal 2006, Baking and Snacking sales were $1,747,000, nearly static with the previous year’s results of $1,742,000.

Finally, the International Soups and Sauces division saw its operating income hold steady, totaling $144 million for the year. Sales in the division grew 2%, totaling $1,255,000 as volume and mix added 3% and currency subtracted 1%.

For the fourth quarter ended July 30, net income fell 54% to $44 million, from $96 million in the same period last year. The decrease in income was partially attributable to costs related to the company’s sale of its U.K. and Irish businesses.

Net sales for the period rose 4%, totaling $1,454 million, compared with $1,404 million in the same period last year.

Operating income in the company’s U.S. Soups, Sauces and Beverages division grew 10%, totaling $114 million. Sales in the division totaled $556 million, up 7% from the year-ago period as volume and mix added 1%, price and sales added 4% and a reduction in promotional spending added 2%.

U.S. soup sales for the quarter rose 9% as condensed soup sales rose 4%, ready-to-serve soup rose 20% and broth sales rose 5%.

The company’s Baking and Snacking division saw its operating income fall 10% to $62 million due to weakness in the Indonesian biscuit business and unfavorable currency conversion.

Sales in the Baking and snacking division fell slightly, totaling $438 million, compared with $439 million in the same period last year.

Operating income in the company’s International Soup and Sauces division fell 71% to $5 million as the company divested its U.K. and Irish businesses. Sales in the division rose 2% to $260 million.

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