Campbell earnings fall 14% on high commodity costs

by Staff
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CAMDEN, N.J. — Cost inflation and marketing investments contributed to a 14% decline in earnings during the second quarter at Campbell Soup Co.

For the quarter ended Jan. 29, the company had earnings of $205 million, equal to 64c per share on the common stock, which compared with earnings of $239 million, or 72c per share, during the same quarter of the previous year. Sales for the year were $2,112 million, down 1% from $2,127 million during the same quarter of the previous year.

“Sales gains in our U.S. Beverages business, where we have a solid ongoing innovation program, outpaced category growth,” said Denise Morrison, president and chief executive officer. “Trends in this business improved since the launch of our new advertising campaign in October. Significant cost inflation and marketing investments negatively impacted profitability in both the quarter and the half.

“Across our portfolio, we increased marketing spending this quarter, consistent with our plan to shift our emphasis to longer-term brand-building activities. Advertising and consumer promotion expense rose 6% as we invested in key brands.

“We are executing a strategic turnaround in an environment of weak volume and high inflation across the food industry. Our first half has been impacted by headwinds in our beverages and Australian businesses, but we continue to make progress against our key growth strategies. In the second half, we expect improved trends in our beverages and Australian businesses, and in U.S. Soup we will begin to cycle our change in discounting, providing an opportunity for better sales performance. We will continue to invest in brand building and innovation, and we are on track to achieve our full-year guidance.”

The U.S. Simple Meals segment had operating earnings of $174 million during the quarter, down 2% from $177 million during the same quarter of the previous year. Sales for the segment were $824 million, down 2%.

Operating earnings for the Global Baking and Snacking segment totaled $71 million, down 12% from $81 million during the same quarter of the previous year. Sales for the segment were $526 million, comparable with the same quarter of the previous year.

For the six months, the company as a whole had earnings of $470 million, or $1.45 per share, down 9% from $518 million, or $1.53 per share, during the same period of the previous year. Sales for the six months were $4,273 million, down 1%.

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