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Campbell Board Approves Major Investment Plan

Primary Focus Is On Market-Leading U.S. Soup Business; In Fiscal 2002, Total Marketing To Increase $200 Million, Capital Spending To Increase $100 Million, And Earnings Per Share To Be Reduced 20 Percent To Approximately $1.30; Annual Dividend To Be Reduced From $.90 To $.63.

CAMDEN, NJ, July 27, 2001– Campbell Soup Company (NYSE:CPB) today announced that its board of directors has unanimously approved a series of investment initiatives to strengthen the company’s position in soup, sauces, beverages and indulgent snacking categories, both in the U.S. and internationally. The majority of the increased investment will go to Campbell’s market-leading U.S. soup business and will be focused on improved product quality, increased marketing, including advertising, and accelerated innovation.

“This plan represents the single most comprehensive commitment to revitalization ever undertaken in the 132-year history of Campbell Soup Company,” said Douglas R. Conant, President and Chief Executive Officer. “Bold action is required. Bold action is being taken.”

Conant continued, “For the past six months we have conducted a wide-ranging and thorough reassessment of our businesses and organization. Our brands, categories, financial capabilities, and people are inherently strong. Our board and our management team are fully aligned behind our highest priority, to rejuvenate our U.S. soup business. We are also committed to maximizing the potential of our broader portfolio through significant improvement in our manufacturing infrastructure, our research and development activities, and our marketing and sales fundamentals.”

Conant added, “The urgent need for transformation of our business is clear and compelling. We have stumbled in the marketplace, weakened our connection with consumers and disappointed investors. This transformation plan will require significant investment and realistic expectations. We need to fund important quality initiatives, restore competitive levels of advertising and consumer support to our brands, and rebuild our infrastructure. We must ensure that our talented workforce of 24,000 people around the world has the resources to do the job. All of these initiatives are crucial to putting the Company back on a growth track.”

As a result of the higher investment, Campbell will reduce its earnings base in fiscal 2002, which begins July 30, to approximately $1.30 per share. For the current fiscal year, Campbell continues to expect earnings per share to be between $1.58 and $1.62. This is after the impact of dilution of two to three cents per share from the recent acquisition of European soup and sauce brands from Unilever. Estimates for both years are before the special charges associated with the previously announced reconfiguration of Campbell’s manufacturing operations in Australia.

In addition, Campbell will reduce its annual dividend by 30 percent, from $.90 cents to $.63 cents per share. The company said this action would improve net cash flow in fiscal 2002 and help maintain its strong financial position. Campbell’s new dividend payout ratio of about 50 percent will be comparable to that of food industry peers.

Conant said Campbell’s plan calls for achieving and sustaining three to four percent annual sales growth and eight percent annual earnings per share growth beginning in fiscal 2003, while maintaining a strong financial profile.

Specific elements of Campbell’s plans for fiscal 2002 include:

  • Increasing total company marketing investment by 15 percent, or approximately $200 million, to fund new product launches and increased advertising and consumer promotion, largely behind core U.S. soup brands.
  • Spending approximately $300 million on capital improvements in fiscal 2002, an increase of $100 million from the current year, to put in place new technology in both soup and snacking that will enhance quality, increase efficiency, and expand manufacturing capacity.
  • Increasing investments in research and development, product and packaging innovation, and overall organizational capabilities.

Conant will detail Campbell’s strategic plan in a speech today to analysts and investors in New York City. He will highlight specific actions designed to revitalize the Company’s market-leading soup business in the U.S.

“Soup is our middle name. We know more about soup products, packaging, and manufacturing processes than anyone else,” Conant said. “And from a consumer perspective, we know the soup category inside out. We just haven’t used our knowledge to full advantage. We have been slow to innovate. We have not kept pace with competitive quality moves. And we have been inconsistent in our advertising messages and spending. Change is underway. This year we have been encouraged by a five- percent increase in consumer purchases of soup. As we have invested behind our franchises, we have seen growth. However, we have more to do to reassert our leadership position in the face of aggressive competition.”

Campbell’s new soup investment plan includes:

  • Significant quality upgrades for Campbell’s eating and cooking soup varieties over the next three years
  • The phase-in of easy-open lids across the entire condensed soup line
  • New Pop ‘N Pour lid for “Swanson” broths
  • Increased advertising spending focused on Campbell’s condensed Red & White, and “Chunky” and “Select” soups
  • Targeted innovation, including testing of a new line of sipping soups for away from home consumption

Beyond soup, Conant outlined additional strategic priorities for Campbell. They include:

  • Integrate and leverage the recently acquired Unilever culinary food brands in Europe.
  • Increase investment in Campbell’s indulgent snack brands–Pepperidge Farm, Godiva and Arnott’s. These businesses are performing at a high level and increased funding will help them to sustain their competitive presence through innovation and new product activity
  • Restore strong levels of investment in sauce brands, including “Prego” and “Pace” in the U.S. and “Homepride” in the U.K., which provide powerful synergies with soup.
  • Restore support to the strong “V8” brand in the U.S. while developing new growth platforms.
  • Leverage Campbell’s global scale, including people, knowledge and capabilities.

Campbell has a bright and exciting future,” Conant concluded. “We understand the challenges that we face. We have strong brands in appealing, growing categories, a very good financial foundation and talented people. We are absolutely committed to meeting the needs of our consumers, customers, shareowners, and employees faster, better, and more completely than ever before.”

Campbell will host an investor meeting in New York City at 10:00 a.m. EDT this morning to discuss its new plans. Access to an audio broadcast of the meeting is available through its website at www.campbellsoup.com.

This release contains “forward-looking statements” which reflect the company’s current expectations about its future performance. These forward-looking statements rely on a number of assumptions and estimates which could be inaccurate and which are subject to risks and uncertainties. These include, but are not limited to, the inherent risks associated with trade and consumer acceptance of product improvements and new product introductions, the effectiveness of promotional programs and new advertising, the company’s ability to achieve its cost savings objectives, uncertainty relating to the prediction of trade inventory movements by trade customers, and other factors described in the company’s most recent Form 10-K as updated from time to time by the company in its subsequent filings with the Securities and Exchange Commission. Actual results could vary materially from those anticipated or expressed in any forward-looking statement made by the company. The company disclaims any obligation or intent to update the forward-looking statements in order to reflect events or circumstances after the date of this release.

About Campbell Soup Company

Campbell Soup Company is a global manufacturer and marketer of high quality soup, sauces, beverage, biscuits, confectionery and prepared food products. The company owns a portfolio of more than 20 market-leading businesses each with more than $100 million in sales. They include “Campbell’s” soups worldwide, “Erasco” soups in Germany and “Liebig” soups in France, “Pepperidge Farm” cookies and crackers, “V8” and “V8 Splash” juices, “Pace” Mexican sauces, “Prego” pasta sauces, “Franco- American” pastas and gravies, “Swanson” broths, “Homepride” sauces in the United Kingdom, “Arnott’s” biscuits in Australia and “Godiva” chocolates around the world. The company also owns dry soup and sauce businesses in Europe under the “Batchelors,” “Oxo,” “Lesieur,” “Royco,” “Liebig,” “Heisse Tasse,” “Blå Band” and “McDonnells” brands. The company is ably supported by 24,000 employees worldwide. For more information on the company, visit Campbell’s website on the Internet at www.campbellsoup.com.