Campbell Reports Fourth-Quarter and Full-Year Results

Denise Morrison, Campbell's President and CEO, said, "Our fourth-quarter results were slightly better than expected. Our Global Baking and Snacking segment delivered strong performance with double-digit top- and bottom-line growth in the quarter.

Sep 5 2011 --- Campbell Soup Company reported its results for the fourth quarter of fiscal 2011.

Net earnings for the quarter ended July 31, 2011, were $100 million, or $0.31 per share, compared with $113 million, or $0.33 per share, in the prior year. The current quarter's reported net earnings included charges associated with previously announced restructuring initiatives. Excluding these charges, adjusted net earnings increased 25 percent to $141 million, and adjusted net earnings per share increased 30 percent to $0.43 in the current quarter. A detailed reconciliation of adjusted financial information to the reported information is included at the end of this news release.

Denise Morrison, Campbell's President and CEO, said, "Our fourth-quarter results were slightly better than expected. Our Global Baking and Snacking segment delivered strong performance with double-digit top- and bottom-line growth in the quarter. We also continued to make progress on our efforts to stabilize U.S. Simple Meals. But we have more work to do. As expected, lower promotional spending contributed to improved soup profits despite anticipated volume declines. We're confident that rebalancing our marketing investments toward consumer-focused brand building activities and developing a more robust innovation pipeline is the right approach to restore profitable growth over time. Sales of U.S. Beverages declined slightly in the quarter, compared to 12-percent growth a year ago. Significant cost inflation and increased promotional spending depressed beverage profits in the quarter."

Morrison concluded, "We're pleased to be finishing a very difficult fiscal year with some positive momentum and a new strategic direction. Fiscal 2012 will be a year of transition, as we build the foundation for a new Campbell with a renewed focus on meeting consumers' needs. Implementing our new strategic framework will require substantial investment as we extend brand and product platforms through more consistent innovation in Simple Meals, Baked Snacks and Healthy Beverages, reinvigorate consumer marketing activities and drive international expansion in priority markets. Our team is beginning to implement these strategies, and the company is energized by this change in direction."

Summary of Fiscal 2011 Fourth-Quarter and Full-Year Results by Segment

U.S. Simple Meals

Sales for U.S. Simple Meals were $431 million for the fourth quarter, a decrease of 8 percent compared to the year-ago period. A breakdown of the change in sales follows:

* Volume and mix subtracted 11 percent
* Decreased promotional spending added 3 percent

U.S. Soup sales declined 9 percent in the quarter. Sales volumes were negatively impacted by reduced promotional spending and higher selling prices as the company continued to transition to improved price realization. Soup sales, especially condensed varieties, were also negatively impacted by unfavorable movements in customer inventory levels.

* Sales of "Campbell's" condensed soups decreased 10 percent, with declines in both eating and cooking varieties.
* Sales of ready-to-serve soups decreased 5 percent, reflecting declines in "Select Harvest" canned soups and microwavable soups.
* Broth salesdeclined 11 percent.

Sales of "Prego" pasta sauce declined due to continued competitive merchandising and competitive new items. Sales of "Pace" Mexican sauce declined largely due to share losses to private label.

Operating earnings were $101 million compared with $97 million in the prior-year period. The increase in operating earnings was primarily due to lower marketing and selling expenses and an increase in gross margin percentage, partially offset by lower sales volumes.

For the full year, U.S. Simple Meals sales decreased 6 percent to $2.751 billion. A breakdown of the change in sales follows:

* Volume and mix subtracted 5 percent
* Increased promotional spending subtracted 1 percent

For the full year, U.S. soup sales declined 6 percent reflecting a 9-percent decrease in ready-to-serve soups and a 4-percent decrease in condensed soups. Sales of broth decreased 1 percent. Sales of "Prego" pasta sauce and "Pace" Mexican sauce both declined.

Operating earnings were $657 million compared with $737 million in the year-ago period, a decrease of 11 percent. The decline in operating earnings was primarily due to lower sales and a reduced gross margin percentage partly offset by lower marketing and selling expenses.

U.S. Beverages

Sales for U.S. Beverages were $176 million for the fourth quarter, down 1 percent compared to the year-ago period. A breakdown of the change in sales follows:

* Volume and mix added 3 percent
* Price and sales allowances subtracted 1 percent
* Increased promotional spending subtracted 3 percent

Beverage sales declined slightly compared to strong growth in the year-ago period in which sales increased 12 percent. Sales of "V8" vegetable juice declined due to increased competitive activity,while sales of "V8 V-Fusion" juice and "V8 Splash" juice drinks increased. Sales of "V8 V-Fusion" juice benefited from the launch of "V-Fusion + Tea," several new flavor varieties and 8-oz. slim cans.

Operating earnings declined 29 percent to $30 million compared with $42 million in the year-ago period. The decrease in operating earnings was primarily due to significant cost inflation, particularly ingredients and packaging costs, and increased promotional spending in response to increased competitive activity, partly offset by productivity improvements.

For the full year, sales for U.S. Beverages were $759 million, comparable to the prior year. A breakdown of the change in sales follows:

* Volume and mix added 2 percent
* Increased promotional spending subtracted 2 percent

Sales of "V8 Splash" juice drinks and "V8 V-Fusion" juice increased, while sales of "V8" vegetable juice declined. Operating earnings were $182 million compared with $206 million in the prior year. Earnings decreased 12 percent primarily due to increased promotional spending.

Global Baking and Snacking

Sales for Global Baking and Snacking were $559 million in the fourth quarter, an increase of 17 percent from a year ago. A breakdown of the change in sales follows:

* Volume and mix added 3 percent
* Price and sales allowances added 5 percent
* Increased promotional spending subtracted 1 percent
* Currency added 10 percent

Further details of sales results include the following:

* Sales at Pepperidge Farm increased, reflecting higher selling prices and volume gains.
o In cookies and crackers, sales increases were fueled by solid gains in "Goldfish" snack crackers, the launch of "Milano Melts" cookies and growth in "Chocolate Chunk Crispy" cookies.
o Sales of fresh bakeryproducts were comparable to the prior year.
o Sales of frozen products increased, driven by gains in Garlic Toast and the launch of Artisan Stone Baked rolls.

* Sales at Arnott's increased due to currency and sales gains in savory crackers, led by "Shapes," and "Tim Tam" chocolate biscuits.

Operating earnings rose to $92 million compared with $73 million in the prior-year period, an increase of 26 percent. The increase in operating earnings was primarily due to growth at Arnott's and the favorable impact of currency, partially offset by a decline at Pepperidge Farm.

For the full year, sales increased 9 percent to $2.156 billion. A breakdown of the change in sales follows:

* Volume and mix added 3 percent
* Price and sales allowances added 2 percent
* Increased promotional spending subtracted 1 percent
* Currency added 5 percent

Operating earnings grew 10 percent to $355 million compared with $322 million in the prior year. The increase in operating earnings was primarily due to the impact of currency and volume-driven growth at both Pepperidge Farm and Arnott's.

International Simple Meals and Beverages

Sales for International Simple Meals and Beverages were $316 million for the fourth quarter, an increase of 12 percent compared with a year ago. A breakdown of the change in sales follows:

* Volume and mix subtracted 3 percent
* Price and sales allowances added 1 percent
* Decreased promotional spending added 2 percent
* Currency added 12 percent

Excluding the impact of currency, higher sales in Europe and Canada were offset by declines in the Asia Pacific region and Latin America.

* In Europe, sales increased primarily due to the favorable impact of currency and increased sales in Belgium.
* In the Asia Pacific region, sales increased due to currency, partially offset by lower soup sales in Australia.
* In Canada, sales increased primarily due to currency and increased sales of soup.

Operating earnings were $24 million compared with $6 million in the year-ago period. The $18-million increase in operating earnings was primarily due to gains in Canada, reduced spending in Russia and the favorable impact of currency.

For the full year, sales increased 3 percent to $1.463 billion from $1.423 billion. A breakdown of the change in sales follows:

* Increased promotional spending subtracted 1 percent
* Currency added 4 percent

Excluding the impact of currency, sales declines in Latin America and Canada were partly offset by gains in the Asia Pacific region.

Operating earnings rose to $185 million compared with $161 million in the year-ago period, an increase of 15 percent. The increase in operating earnings was primarily due to growth in the Asia Pacific region, the impact of currency and reduced spending in Russia.

North America Foodservice

Sales were $125 million for the fourth quarter, an increase of 10 percent compared with a year ago. A breakdown of the change in sales follows:

* Volume and mix added 1 percent
* Price and sales allowances subtracted 1 percent
* Decreased promotional spending added 8 percent
* Currency added 2 percent

Operating earnings increased to $16 million from $3 million. The increase in operating earnings was primarily driven by reduced promotional spending and productivity improvements.

For the full year, sales increased to $590 million from $578 million. A breakdown of the change in sales follows:

* Volume and mix subtracted 1 percent
* Decreased promotional spending added 2 percent
* Currency added 1 percent

Operating earnings increased 49 percent to $82 million compared with $55 million in the year-ago period. The increase in operating earnings was primarily driven by reduced promotional spending, productivity improvements in excess of inflation and lower administrative expenses.