Campbell earnings fall 4% in quarter

by FoodBusinessNews.net Staff
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CAMDEN, N.J. — Net earnings at the Campbell Soup Co. eased 4% in the second quarter ended Jan. 27, as high commodity and energy costs weighed on results. The company also incurred charges of $5 million related to the divestiture of the Godiva business.

Net income for the second quarter were $274 million, equal to 73c per share on the common stock, which compared with $285 million, or 74c per share, during the same quarter of the previous year.

Net sales during the quarter totaled $2,218 million, up 7% from $2,064 million during the same quarter of the previous year.

"Like many companies in the food industry, Campbell has faced unprecedented commodity and energy cost increases this year," said Douglas R. Conant, president and chief executive officer. "The significant increase in these costs negatively impacted the company’s gross margin during the first six months of the year. We are taking the necessary steps to restore margin through a combination of price increases and ongoing productivity improvements.

"Once we complete the divestiture of the Godiva business, Campbell will be an even more focused food company and be better able to leverage our competitive advantages in our three strategic growth areas of simple meals, anchored by soup; baked snacks, anchored by biscuits; and healthful beverages, anchored by vegetable-based beverages."

Operating earnings for the U.S. Soup, Sauces and Beverages segment was $286 million, up 4% from $274 million during the previous year. Sales in the segment were $1,093 million, up 6% from $1,030 million.

Operating earnings in the Baking and Snacking category were $68 million, down 12% from $77 million during the previous year. Sales were $491 million, up 8% from $454 million during the previous year.

In the International Soup, Sauces and Beverages segment, operating earnings was $61 million, up 5% from $58 million during the previous year. Sales in the segment were $458 million, up 13% from $404 million.

The North America Foodservice segment posted operating earnings of $20 million, down 20% from $25 million during the previous year. Sales in the segment were flat compared with the previous year at $176 million.

"Through the first half of the year we have delivered strong sales growth across many of our businesses," Mr. Conant said. "Despite the difficult operating environment, we also have delivered solid earnings performance from continuing operations while maintaining marketing support for our key brands."

For the six months ended Jan. 27, the company had net earnings of $544 million, equal to $1.44 per share, down 6% from $576 million, or $1.48 per share, during the same period of the previous year. Sales during the six months rose 7% to $4,403 million, which compared with $4,115 million during the same period of the previous year.

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