Camden, N.J., September 11, 2008 - Campbell Soup Company today reported net earnings for the quarter ended August 3, 2008 of $89 million, or $0.24 per share, compared to $61 million, or $0.16 per share, in the year-ago period. The current quarter's reported net earnings included charges associated with previously announced restructuring initiatives. Excluding all items impacting comparability in both periods, adjusted net earnings were $96 million compared to $53 million in the prior year's quarter and adjusted net earnings per share were $0.26 in the current quarter compared to $0.14 in the year-ago quarter, an increase of 86 percent.
In March 2008, Campbell completed the sale of the Godiva business, the results of which are reported as discontinued operations for all periods. Additionally, in the third and fourth quarters, Campbell recorded restructuring charges and costs related to previously announced initiatives to improve operational efficiency and enhance long-term profitability, including the sale of certain salty snack foods brands and assets in Australia, the closure of production facilities in Australia and Canada, and the streamlining of its management structure.
In the fourth quarter, earnings from continuing operations were $89 million compared to $58 million in the prior year. Earnings per share from continuing operations for the current quarter were $0.24 compared to $0.15 in the year-ago period. Excluding items impacting comparability, adjusted earnings from continuing operations in the fourth quarter were $96 million compared to $58 million in the year-ago period. Adjusted earnings per share from continuing operations were $0.26 compared to $0.15 in the prior-year period, an increase of 73 percent.
In the prior period, earnings from discontinued operations were $3 million, or $0.01 per share. Excluding items impacting comparability, the adjusted loss from discontinued operations was $5 million, or $0.01 per share, reflecting the seasonality of the Godiva business.
For the fourth quarter, sales increased 13 percent to $1.715 billion. Sales growth for the quarter reflects the following factors:
Volume and mix subtracted 1 percent
Price and sales allowances added 5 percent
Increased promotional spending subtracted 1 percent
Currency added 4 percent
Divestitures subtracted 2 percent
The 53rd week added 8 percent
Douglas R. Conant, Campbell's President and Chief Executive Officer, said, "We delivered a very strong quarter, including in our U.S. soup business, to complete a challenging year in which we faced unprecedented cost inflation. For the sixth consecutive year, we met or exceeded our financial guidance. Our more focused portfolio strategy is paying off, as we grew sales and earnings for the year in each of our three core categories-simple meals, baked snacks and healthy beverages.
"In U.S. soup, our focus on wellness is working. Our lower sodium soup portfolio continued its strong performance, and we are well positioned to build on this success in fiscal year 2009, especially with the launch of 'Campbell's Select Harvest' ready-to-serve soups. In addition, our soup businesses in Canada and Australia posted good results for the year."
Conant continued, "Looking at the rest of our portfolio, Pepperidge Farm once again delivered outstanding performance, and Arnott's also had a strong year in its core biscuit business. In healthy beverages, our 'V8' brand, led by 'V8 V-Fusion,' reported double-digit sales growth for the year. In the emerging markets of Russia and China, we are encouraged by our progress in our first year in the marketplace, and we are optimistic about our expansion plans in both geographies.
"Looking ahead to fiscal 2009, we have strong plans in place across our portfolio to win with consumers in our core categories."
Conant concluded, "In fiscal 2009, we expect our continuing operations, excluding the negative impact of one less week in the fiscal year and recent divestitures, to deliver sales growth in excess of our long-term target range of between 3 and 4 percent. We expect to deliver EBIT growth, excluding items impacting comparability, slightly below our long-term target growth rate of between 5 and 6 percent, reflecting the impact of one less week in the fiscal year, higher marketing spending behind increased innovation in the U.S. and increased investment spending in Russia and China. Consistent with our long-term target growth rate, we expect to deliver adjusted net earnings per share growth between 5 and 7 percent from the fiscal 2008 adjusted base of $2.09."
Net earnings for fiscal 2008 were $1.165 billion, or $3.06 per share, compared to $854 million, or $2.16 per share, in the year-ago period.
Excluding items impacting comparability, adjusted net earnings were $797 million compared to $771 million in the year-ago period. Adjusted net earnings per share were $2.09 in the current period compared to $1.95 in the prior period, an increase of 7 percent.
For fiscal 2008, earnings from continuing operations were $671 million versus $792 million a year earlier. Earnings per share from continuing operations were $1.76 compared to $2.00 a year ago.
Excluding the above-referenced items in both years, adjusted earnings from continuing operations for fiscal 2008 were $765 million compared to $740 million a year ago and adjusted earnings per share from continuing operations were $2.01 compared to $1.87 a year ago, an increase of 7 percent.
Earnings from discontinued operations for the year were $494 million, or $1.30 per share, versus $62 million, or $0.16 per share, a year ago. Excluding items impacting comparability in both years, adjusted earnings from discontinued operations for the year were $32 million, or $0.08 per share, compared to $31 million, or $0.08 per share, a year ago.
For fiscal 2008, net sales were $7.998 billion, an increase of 8 percent. Sales growth for the year reflects the following factors:
Volume and mix added 2 percent
Price and sales allowances added 2 percent
Increased promotional spending subtracted 1 percent
Currency added 4 percent
Divestitures subtracted 1 percent
The 53rd week added 2 percent
Full Year Financial Details from Continuing Operations
Gross margin decreased to 39.6 percent from 40.6 percent. The decline was primarily due to escalating cost inflation, partially offset by higher selling prices and productivity gains.
Restructuring charges of $175 million included $120 million related to the loss on the sale of certain Australian salty snack foods brands and assets, $38 million for plant closures and $17 million related to streamlining the company's management structure. An additional $7 million of accelerated depreciation was recorded in cost of products sold. Total costs to date in fiscal 2008 related to the company's initiatives designed to improve operational efficiency and long-term profitability were $182 million.
Cash flow from operations for fiscal 2008 was $766 million compared to $674 million in the prior period.
During the fiscal year, Campbell repurchased 26 million shares for $903 million. The company completed its three-year $600 million share repurchase program and the program using approximately $600 million of the net proceeds from the sale of Godiva to repurchase shares. Campbell also repurchased shares under its practice to offset shares issued under incentive compensation plans. In June 2008, Campbell announced that its Board of Directors authorized a new three-year program to purchase up to $1.2 billion of its outstanding shares in open market and privately negotiated transactions.
Summary of Fiscal 2008 Fourth Quarter Results by Segment
U.S. Soup, Sauces and Beverages
Sales for U.S. Soup, Sauces and Beverages were $673 million compared to $601 million a year ago, an increase of 12 percent. The change in sales reflects the following factors:
Price and sales allowances added 5 percent
Increased promotional spending subtracted 1 percent
The 53rd week added 8 percent
On a reported basis, U.S. soup sales for the quarter increased 15 percent. Sales of condensed soup increased 14 percent, sales of ready-to-serve soup increased 13 percent and broth sales increased 21 percent.
Excluding the benefit of the 53rd week, U.S. soup sales increased 6 percent, driven by the following:
Sales of "Campbell's" condensed soups increased 6 percent with gains in both eating and cooking varieties.
Sales of ready-to-serve soups increased 5 percent due to solid gains in "Campbell's Chunky" soups in both cans and microwavable bowls.
Sales of "Swanson" broth increased 13 percent.
Further details of the sales results of this segment's other businesses include:
Beverage sales increased primarily due to the impact of the 53rd week and the continued growth of "V8 V-Fusion" juice.
"Prego" pasta sauce sales increased primarily due to the 53rd week.
"Pace" Mexican sauces increased due to the 53rd week and a new line of specialty salsas.
Operating earnings were $124 million compared to $84 million in the prior-year period. The increase in operating earnings was primarily due to higher pricing, productivity improvements, lower marketing expenses and the benefit of the 53rd week, partially offset by the impact of cost inflation.
For fiscal 2008, U.S. Soup, Sauces and Beverages sales increased 5 percent to $3.674 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
The 53rd week added 1 percent
For the year, on a reported basis, U.S. soup sales increased 2 percent. Excluding the benefit of the 53rd week, U.S. soup sales increased 1 percent:
Sales of "Campbell's" condensed soup were flat, with gains in cooking varieties offset by declines in eating varieties.
Sales of ready-to-serve soup increased 1 percent. Gains in "Campbell's Chunky" and "Campbell's Select" soup in cans were partially offset by declines in the convenience platform, which includes soups in microwavable bowls and cups.
U.S. soup sales continued to benefit from the success of lower sodium products.
"Swanson" broth sales increased 11 percent.
Further details of the sales results of this segment's other businesses include:
Excluding the impact of the 53rd week, beverage sales increased double digits. Sales growth was primarily driven by consumer demand for healthy beverages, with gains in "V-8" vegetable juice and "V-8 V-Fusion" juice, as well as in "V8 Splash" juice drinks. Beverage sales benefited from expanded distribution following an agreement with The Coca-Cola Company and Coca-Cola Enterprises Inc. to distribute Campbell's single-serve refrigerated beverages in North America.
Sales of "Prego" pasta sauce and "Pace" Mexican sauces increased.
Operating earnings were $891 million compared to $861 million in the year-ago period. The increase in operating earnings was primarily due to higher sales volumes, productivity improvements and higher price realization, partially offset by the impact of cost inflation.
Baking and Snacking
Sales for Baking and Snacking were $533 million, an increase of 13 percent from a year ago. A breakdown of the change in sales follows:
Volume and mix added 1 percent
Price and sales allowances added 8 percent
Increased promotional spending subtracted 3 percent
Currency added 5 percent
Divestitures subtracted 6 percent
The 53rd week added 8 percent
Further details of sales results include the following:
Pepperidge Farm achieved double-digit sales growth, primarily driven by gains in the cookies and crackers and bakery businesses and the positive impact of the 53rd week. Excluding the impact of the 53rd week:
In the cookies and crackers business, sales growth was driven by continued consumer demand for "Goldfish" snack crackers, the launch of Baked Naturals, a line of adult savory snack crackers, and growth in cookies.
The bakery business delivered double-digit sales gains behind continued consumer demand for whole-grain breads and growth in sandwich rolls.
Arnott's sales increased primarily due to the favorable impact of currency and biscuit growth, offset by the divestiture of certain Australian salty snack foods brands.
Operating earnings increased to $72 million compared with $49 million a year ago. The increase in operating earnings was due to higher earnings in Arnott's, the benefit of the 53rd week and the favorable impact of currency.
For fiscal 2008, sales increased 11 percent to $2.058 billion. A breakdown of the change in sales follows:
Volume and mix added 2 percent
Price and sales allowances added 6 percent
Increased promotional spending subtracted 1 percent
Currency added 5 percent
Divestitures subtracted 3 percent
The 53rd week added 2 percent
Further details of sales results include the following:
Pepperidge Farm sales increased across all businesses: cookies and crackers, bakery and frozen.
The cookies and crackers business posted strong gains due to the continued growth of "Goldfish" snack crackers, the launch of Baked Naturals crackers, and growth in distinctive cookies.
Increased bakery sales were driven by gains in whole-grain varieties and sandwich rolls.
Arnott's sales increased due to the favorable impact of currency, biscuit growth and the benefit of the 53rd week, partially offset by the divestiture of certain Australian salty snack foods brands and the company's biscuit business in Papua New Guinea.
Operating earnings were $120 million compared to $238 million in the year-ago period. The current period included $144 million of restructuring charges. Operating earnings in the prior period included a $23 million gain from the sale of the Pepperidge Farm facility. Excluding the gain from the sale and restructuring charges, the increase in operating earnings was primarily due to earnings growth in Arnott's biscuits, the favorable impact of currency and gains in Pepperidge Farm.
International Soup, Sauces and Beverages
Sales for International Soup, Sauces and Beverages were $362 million, an increase of 17 percent compared to a year ago. The change in sales reflects the following factors:
Volume and mix subtracted 3 percent
Price and sales allowances added 1 percent
Currency added 11 percent
The 53rd week added 8 percent
Excluding the impact of the 53rd week, further details of sales results include the following:
Sales in Europe increased due to the favorable impact of currency and growth in the Belgium business, partially offset by declines in France and Germany, where the company exited the private label soup business.
Sales in the Asia Pacific region increased due to the favorable impact of currency and growth in the Australian soup business.
In Canada, sales increased due to the favorable impact of currency.
Operating earnings were $27 million compared to $18 million in the year-ago period. The current quarter included $3 million in restructuring charges. Excluding the restructuring charges, the increase in operating earnings was driven by growth in the Canadian business, the favorable impact of currency and the benefit of the 53rd week, partially offset by impairment charges on certain trademarks and costs associated with the launch of new products in Russia and China.
For fiscal 2008, sales increased 15 percent to $1.610 billion. A breakdown of the change in sales follows:
Volume and mix added 2 percent
Currency added 11 percent
The 53rd week added 2 percent
Excluding the impact of the 53rd week, further details of sales results include the following:
Sales in Europe increased due to the favorable impact of currency and volume-driven gains in the Belgium business, which were partially offset by a decline in Germany.
In the Asia Pacific region, sales increased due to the favorable impact of currency and growth in the Australian soup business.
In Canada, sales increased primarily due to the favorable impact of currency and growth in the soup and beverages businesses.
Operating earnings increased to $179 million from $168 million in the year-ago period. The current period included $9 million of restructuring charges. Excluding the restructuring charges, the increase in operating earnings was primarily due to the favorable impact of currency and growth in the Canadian and Australian soup businesses, partially offset by costs associated with the launch of new products in Russia and China and impairment charges on certain trademarks.
North America Foodservice
Sales were $147 million, an increase of 7 percent. A breakdown of the change in sales follows:
Volume and mix subtracted 6 percent
Price and sales allowances added 4 percent
Currency added 1 percent
The 53rd week added 8 percent
Excluding the impact of the 53rd week, sales declined. Sales declines in refrigerated soup were partially offset by gains in frozen and canned soups.
Operating earnings were $0 compared to operating earnings of $17 million in the prior period. The current quarter included $7 million of costs related to improving operational efficiency and long-term profitability. The prior year included a $10 million gain related to a settlement in lieu of condemnation of a refrigerated soup facility in Washington State.
For fiscal 2008, sales increased 3 percent to $656 million. A breakdown of the change in sales follows:
Volume and mix subtracted 2 percent
Price and sales allowances added 2 percent
Increased promotional spending subtracted 1 percent
Currency added 2 percent
The 53rd week added 2 percent
Operating earnings decreased to $40 million from $78 million in the year-ago period. The current year included $29 million of restructuring charges and related costs to improve operational efficiency and long-term profitability. The prior year included a $10 million gain related to a settlement in lieu of condemnation of a refrigerated soup facility in Washington State, partially offset by relocation and start-up costs associated with the replacement facility. The current year's earnings also were adversely impacted by cost inflation, partially offset by higher selling prices and productivity gains.