Campbell earnings fall 15% in quarter

by Eric Schroeder
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CAMDEN, N.J. — Higher advertising and promotional spending coupled with currency exchange rates led to lower earnings at The Campbell Soup Co. during the second quarter.

For the second quarter ended Feb. 1, net earnings were $233 million, equal to 66c per share on the common stock, down 15% from $274 million, or 73c per share, during the same quarter of the previous year. The most recent quarter included charges associated with previously announced restructuring initiatives and the impact of an unrealized loss on the company’s commodity hedging activities and a tax adjustment related to the divestiture of the Godiva business. Excluding those items, adjusted net earnings would have been $234 million, down from $266 million in the same period a year ago.

Sales for the quarter were $2,122 million, down 4% from $2,218 million during the same quarter of the previous year.

"In the second quarter, we maintained momentum in our U.S. soup business, building on very strong sales in the first quarter," said Douglas R. Conant, president and chief executive officer. "Our product innovations in ready-to-serve soups and effective marketing of our condensed portfolio have resonated with consumers as they eat more meals at home. We remain encouraged by the successful launches of Campbell’s Select Harvest and Campbell’s V8 ready-to-serve soups and Swanson stock. Prego and Pace sauces also benefitted from consumers eating more meals at home.

"Overall, we are pleased with our performance in the quarter, especially considering that currency negatively impacted results and major retailers significantly reduced inventory levels. While these inventory reductions have impacted our U.S. soup, sauces and beverage businesses, encouragingly consumer takeaway has outpaced sales growth."

The U.S. Soup, Sauces and Beverages segment had earnings of $270 million, down 6% from $286 million during the same quarter of the previous year. Sales for the segment were $1,128 million, up 3% from $1,093 million during the same quarter of the previous year.

The Baking and Snacking segment had earnings of $53 million, down 22% from $68 million during the same quarter of the previous year. Sales in the segment were $440 million, down 10% from $491 million during the same quarter of the previous year.

The North America Foodservice segment had earnings of $10 million, down 50% from $20 million during the same quarter of the previous year. Sales for the segment were $163 million, down 7% from $176 million.

The International Soup, Sauces and Beverages segment posted earnings of $50 million, down 18% from $61 million. Sales were $391 million, down 15% from $458 million.

For the first six months ended Feb. 1 Campbell posted earnings of $493 million, or $1.38 per share, down from $544 million, or $1.44 per share. Sales were $4,372 million, down 1% from $4,403 million.

Campbell said it is maintaining its projection of 3% to 4% sales growth for the fiscal year and expects its profits for the year to be at the high end of the previously projected 5% to 7% growth range.

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