Campbell earnings fall 5% in first quarter

by Staff
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CAMDEN, N.J. — Earnings for Campbell Soup Co. were down 5% during the first quarter as price increases did not offset lower volume in soups and beverages.

For the quarter ended Oct. 30, the company had earnings of $265 million, equal to 82c per share on the common stock, which compared with income of $279 million, also equal to 82c per share, during the same quarter of the previous year. Sales for the quarter were $2,161 million, nearly flat compared with $2,172 million during the same quarter of the previous year.

“As we’ve previously stated, fiscal 2012 will be a year of investment as we establish the foundation for the next era of profitable growth at Campbell,” said Denise Morrison, president and chief executive officer. “While it is early in this transition year, our efforts to stabilize U.S. Soup profitability are on track. As planned, we raised prices in response to inflation and reduced ineffective marketing spending, which led to improved profits despite anticipated volume declines. Specifically, we engaged in significantly less promotional spending. We also commenced our U.S. Soup advertising later in the quarter to coincide with the start of soup season. This is part of a planned, full-year timing shift of our media dollars into the soup season where they are most effective.”

The U.S. Simple Meals segment had earnings of $260 million during the quarter, up 8% from $240 million during the same quarter of the previous year. The segment had sales of $874 million, down 3% from $898 million.

U.S. Beverages had earnings of $30 million, down 45% from $55 million during the same quarter of the previous year. The segment had sales of $198 million, down 3% from $205 million.

“In U.S. Beverages, we faced increased inflation, a weaker category and intensified competition, with new entrants in both 100% vegetable juice and fruit and vegetable blends,” Ms. Morrison said. “We stepped up our advertising near the end of October, when our new ‘V8’ campaign began airing. Although our consumption growth outpaced the category and our market share increased, this required significant investment to protect our business.

“We will increase investment in brand building and innovation programs this fiscal year. We’re encouraged by the speed to shelf of our new product innovations this quarter and our progress on the longer term process of building a steady stream of consumer-driven innovation in our key businesses.”

Operating earnings in the Global Baking and Snacking division fell 12% to $88 million from $100 million. Sales, meanwhile, rose 4% to $568 million from $544 million.

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