Fourth-Quarter Organic Sales Increased 3 Percent
Fourth-Quarter Adjusted Net Earnings per Share Declined 5 Percent to $0.41
Full-Year Adjusted Net Earnings per Share Declined 4 Percent to $2.44
Campbell Provides Fiscal 2013 Guidance
CAMDEN, N.J.–(BUSINESS WIRE)–Sep. 4, 2012– Campbell Soup Company (NYSE:CPB) today reported its fourth-quarter and full-year results for fiscal 2012.
Net earnings for the quarter ended July 29, 2012 were $127 million, or $0.40 per share, compared with $100 million, or $0.31 per share, in the prior year. The current quarter’s reported net earnings included transaction costs associated with the Aug. 6, 2012 acquisition of Bolthouse Farms. The prior-year quarter’s reported net earnings included charges associated with the previously announced June 2011 restructuring program. Excluding items impacting comparability in both periods, adjusted net earnings decreased 8 percent to $130 million compared with $141 million in the prior year’s quarter, and adjusted net earnings per share decreased 5 percent to $0.41 compared with $0.43 in the year-ago quarter. A detailed reconciliation of current and prior-year adjusted financial information to the reported information is included at the end of this news release.
Denise Morrison, Campbell’s President and Chief Executive Officer, said, “In the fourth quarter, we generated organic sales growth, with gains across most of our portfolio, including strong sales in U.S. Soup and U.S. Simple Meals. Retailers continue to respond favorably to our new product development, and we have started shipping new products for fiscal 2013 launches.”
Morrison continued, “In fiscal 2012, we advanced our strategies to stabilize and profitably grow North America soup and simple meals, to expand our international presence and to drive growth in healthy beverages and baked snacks. In the first year of our strategic transition, we’ve renewed our focus on consumer insights, reinvigorated our brand building efforts and significantly improved our innovation pipeline. With the acquisition of Bolthouse Farms, we positioned Campbell for growth in the rapidly expanding packaged fresh market. While we’ve had some important accomplishments this year, we also recognize that driving change at Campbell will require a sharper focus on execution. Our strategic framework is a roadmap to drive disciplined and successful change at Campbell. We will continue to enhance and grow our core business, while we broaden our appeal with new consumer groups, new product platforms and new geographies.”
Morrison concluded, “As we begin the new fiscal year, we are confident that we will improve our sales and earnings trends. Today, we’ve provided specific growth ranges for fiscal 2013 sales, adjusted EBIT and adjusted EPS.”
Campbell’s fiscal 2013 guidance, which is included at the end of this news release, reflects improved trends in the company’s core business, as well as the impact of Bolthouse Farms.
For the fourth quarter, sales were $1.613 billion, comparable to a year ago. Sales were impacted by the following factors:
Fourth-Quarter Financial Details
Net earnings for the fiscal year were $774 million, or $2.41 per share, compared with $805 million, or $2.42 per share, in the year-ago period. Excluding items impacting comparability in both periods, adjusted net earnings declined 7 percent to $783 million, compared to adjusted net earnings of $846 million. Adjusted net earnings per share declined 4 percent to $2.44 versus an adjusted $2.54 per share in the prior year.
Sales for the fiscal year were $7.707 billion, comparable to the prior year. Sales were impacted by the following factors:
Full-Year Financial Details
Summary of Fiscal 2012 Fourth-Quarter and Full-Year Results by Segment
U.S. Simple Meals
Sales for U.S. Simple Meals were $461 million for the fourth quarter, an increase of 7 percent compared with the year-ago period. A breakdown of the change in sales follows:
U.S. Soup sales increased 9 percent compared with the year-ago quarter. The sales growth was primarily attributable to condensed soup, which benefited from movements in retailer inventory levels associated with the timing of promotional activity, as well as consumption increases.
U.S. Sauces sales increased 4 percent compared to the year-ago quarter. Sales of both “Prego” pasta sauces and “Pace” Mexican sauces were driven by volume gains, benefiting from increased advertising and promotional support.
U.S. Simple Meals operating earnings were $104 million compared with $101 million in the prior-year period, an increase of 3 percent. The increase in operating earnings reflected earnings gains in U.S. Soup, partly offset by a decline in U.S. Sauces. For the segment, higher sales volume was partially offset by a decline in gross margin percentage and increased advertising expenses.
For the full year, sales for U.S. Simple Meals decreased 1 percent to $2.726 billion. A breakdown of the change in sales follows:
U.S. Soup sales declined 2 percent reflecting a 7-percent decrease in ready-to-serve soups, partly offset by a 1-percent increase in condensed soups and a 3-percent increase in broth sales. Sales of U.S. Sauces increased slightly as gains in “Prego” pasta sauces were mostly offset by lower sales of “Pace” Mexican sauces and declines in other simple meal products.
U.S. Simple Meals operating earnings were $658 million compared with $657 million in the prior year, reflecting earnings gains in U.S. Soup that were mostly offset by lower earnings in U.S. Sauces. For the segment, higher selling prices, productivity improvements and lower promotional spending were mostly offset by volume declines and cost inflation.
Global Baking and Snacking
Sales for Global Baking and Snacking were $556 million for the fourth quarter, a decrease of 1 percent from a year ago. Organic sales increased 2 percent. A breakdown of the change in sales follows:
Further details of sales results included the following:
Operating earnings for the quarter were $83 million compared with $92 million in the prior year. The decrease in operating earnings reflected lower earnings in Arnott’s, partly offset by growth in Pepperidge Farm. For the segment, the 10-percent decline was primarily due to increased promotional spending and cost inflation, partly offset by higher selling prices and productivity improvements.
For the full year, sales increased 2 percent to $2.193 billion. A breakdown of the change in sales follows:
Operating earnings decreased 11 percent to $315 million compared with $355 million in the year-ago period. The decline was primarily due to cost inflation, increased promotional spending and higher advertising, partly offset by higher selling prices and productivity improvements.
International Simple Meals and Beverages
Sales for International Simple Meals and Beverages were $294 million for the fourth quarter, a decrease of 7 percent. Organic sales increased 1 percent. The change in sales reflected the following factors:
Excluding the impact of currency, higher sales in Latin America, primarily beverage products, were partially offset by declines in Canada, while sales in Europe and in the Asia Pacific region were comparable to the year-ago period.
Operating earnings were $15 million compared with $24 million in the year-ago period. The decrease in operating earnings was primarily due to cost inflation and increased promotional spending, partly offset by higher selling prices.
For the full year, sales decreased 4 percent to $1.404 billion. Organic sales declined 2 percent. A breakdown of the change in sales follows:
Excluding the impact of currency, sales declines in Canada, Europe and the Asia Pacific region were partly offset by gains in Latin America.
Operating earnings fell to $153 million compared with $185 million in the year-ago period. The decrease in operating earnings was primarily due to lower earnings in the Asia Pacific region and Canada, as well as increased costs associated with the company’s market expansion in China.
Sales for U.S. Beverages were $181 million for the fourth quarter, an increase of 3 percent compared to the year-ago period, due to gains from volume and mix.
Sales gains continued to outpace category growth and were primarily driven by double-digit increases in “V8 Splash” beverages and gains in “V8 V-Fusion” beverages, partially offset by declines in “V8” vegetable juice. Sales of “V8 V-Fusion” beverages benefited from the launch of new items, including Smoothies, Energy, Sparkling and Kids’ drinks.
Operating earnings for the quarter were $25 million compared with $30 million in the year-ago period. The decrease in earnings was primarily due to an increase in marketing expenses and a decline in gross margin percentage, partly offset by higher sales volume.
For the full year, sales increased 2 percent to $774 million. A breakdown of the change in sales follows:
Sales of both “V8 Splash” beverages and “V8 V-Fusion” beverages increased, while sales of “V8” vegetable juice declined.
Operating earnings declined to $134 million from $182 million in the year-ago period, primarily due to cost inflation, particularly juice concentrates and packaging materials, increased promotional spending and higher advertising expenses, partly offset by productivity improvements.
North America Foodservice
Sales for North America Foodservice were $121 million for the fourth quarter, a decrease of 3 percent compared with a year ago. A breakdown of the change in sales follows:
The decrease was primarily due to declines in canned soup sales.
Operating earnings decreased $6 million to $10 million due to higher promotional spending and cost inflation, partly offset by productivity improvements and higher selling prices.
For the full year, sales increased 3 percent to $610 million. A breakdown of the change in sales follows:
Operating earnings were $85 million compared with $82 million in the year-ago period, an increase of 4 percent. The increase in operating earnings was primarily driven by higher selling prices and productivity improvements, partially offset by cost inflation.
Unallocated Corporate Expenses
Unallocated corporate expenses for the quarter were $33 million compared with $31 million a year ago. Unallocated expenses for the full year were $123 million versus $119 million in the prior year. Both the current fourth quarter and full year reflect $5 million of transaction costs related to the Bolthouse Farms acquisition.
Bolthouse Farms Acquisition
On Aug. 6, 2012, Campbell completed the acquisition of Bolthouse Farms for $1.55 billion, subject to customary purchase price adjustments. In the fourth quarter, Campbell recorded pre-tax transaction costs of $5 million, $3 million after-tax, or $0.01 per share, related to the acquisition. Beginning in the first quarter of fiscal 2013, Campbell’s results will include the Bolthouse Farms business.
Fiscal 2013 Guidance
In fiscal 2013, Campbell expects to grow sales between 10 and 12 percent, adjusted EBIT between 4 and 6 percent and adjusted EPS between 3 and 5 percent. The company expects adjusted EPS to be between $2.51 and $2.57. This guidance includes the estimated impact of the Bolthouse Farms business and excludes the impact of transaction costs. In fiscal 2013, Campbell expects Bolthouse Farms to contribute approximately $750 million to sales. Including the estimated impact of purchase accounting and the suspension of the company’s strategic share repurchase program, Campbell expects Bolthouse Farms to add $0.05 to $0.07 cents to fiscal 2013 adjusted EPS.
Non-GAAP Financial Information
A detailed reconciliation of the adjusted financial information to the reported financial information is included at the end of this news release.
Campbell will host a conference call to discuss these results on Sept. 4, 2012, at 10:00 a.m. Eastern Daylight Time. U.S. participants may access the call at 1-866-436-0576 and non-U.S. participants at 1-786-800-3941. Participants should call at least ten minutes prior to the starting time. The passcode is “Campbell Soup” and the conference leader is Jennifer Driscoll. The call will also be broadcast live over the Internet at investor.campbellsoupcompany.com and can be accessed by clicking on the “News & Events” button. A recording of the call will be available approximately two hours after it is completed through midnight Oct. 4, 2012, at 1-855-859-2056 or 1-404-537-3406. The access code is 21752010.
Campbell Soup Company earnings results are reported for the following segments:
U.S. Simple Meals aggregates the U.S. Soup and U.S. Sauces businesses. The U.S. Soup business includes the following products: “Campbell’s” condensed and ready-to-serve soups, and “Swanson” broth and stocks. The U.S. Sauces business includes “Prego” pasta sauce, “Pace” Mexican sauce, “Swanson” canned poultry, “Campbell’s” canned pasta, gravies, and beans.
Baking and Snacking aggregates the following: “Pepperidge Farm” cookies, crackers, breads and frozen products in U.S. retail; and “Arnott’s” biscuits in Australia and Asia Pacific.
International Simple Meals and Beverages aggregates the following: soup, sauce and beverage products outside of the United States, including Europe, Latin America, Asia Pacific, China and the retail business in Canada.
U.S. Beverages represents the following products: “V8” vegetable juices, “V8 V-Fusion” juices and juice beverages, “V8 Splash” juice beverages, and “Campbell’s” tomato juice.
North America Foodservice represents the distribution of products such as soup, specialty entrees, beverage products, other prepared foods and “Pepperidge Farm” products through various food service channels in the United States and Canada.
About Campbell Soup Company
Campbell Soup Company is a global manufacturer and marketer of high-quality foods and simple meals, including soup and sauces, baked snacks and healthy beverages. Founded in 1869, the company has a portfolio of market-leading brands, including “Campbell’s,” “Pepperidge Farm,” “Arnott’s,” “V8” and “Bolthouse Farms.” Through its corporate social responsibility program, the company strives to make a positive impact in the workplace, in the marketplace and in the communities in which it operates. Campbell is a member of the Standard & Poor’s 500 and the Dow Jones Sustainability Indexes. For more information, visit https://www.campbellsoup.com.
This release contains “forward-looking statements” that reflect the company’s current expectations about the impact of its future plans and performance on sales, earnings, and margins. These forward-looking statements rely on a number of assumptions and estimates that could be inaccurate and which are subject to risks and uncertainties. The factors that could cause the company’s actual results to vary materially from those anticipated or expressed in any forward-looking statement include (1) the impact of strong competitive responses to the company’s efforts to leverage its brand power in the market; (2) the risks associated with trade and consumer acceptance of the company’s initiatives; (3) the company’s ability to realize projected cost savings and benefits; (4) the company’s ability to manage changes to its business processes; (5) the increased significance of certain of the company’s key trade customers; (6) the impact of fluctuations in the supply or costs of energy and raw and packaging materials; (7) the impact of portfolio changes, including the Bolthouse Farms acquisition; (8) the uncertainties of litigation; (9) the impact of changes in currency exchange rates, tax rates, interest rates, debt and equity markets, inflation rates, economic conditions and other external factors; (10) the impact of unforeseen business disruptions in one or more of the company’s markets due to political instability, civil disobedience, armed hostilities, natural disasters or other calamities; and (11) other factors described in the company’s most recent Form 10-K and subsequent Securities and Exchange Commission filings. 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.
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
In fiscal 2012, the company recorded pre-tax transaction costs of $5 ($3 after tax or $.01 per share) associated with the acquisition of Bolthouse Farms, which closed on August 6, 2012. The costs are included in Other expenses.
In fiscal 2011, the company recorded pre-tax restructuring charges of $63 ($41 after tax or $.12 per share) associated with the initiatives announced in June 2011 to improve supply chain efficiency, reduce overhead costs across the organization, and exit the Russian market.
In fiscal 2012, the company recorded pre-tax restructuring charges of $10 ($6 after tax or $.02 per share) associated with the initiatives announced in June 2011 to improve supply chain efficiency, reduce overhead costs across the organization, and exit the Russian market. In fiscal 2011, the company recorded pre-tax restructuring charges of $63 ($41 after tax or $.12 per share) associated with the initiatives.
In fiscal 2012, the company recorded pre-tax transaction costs of $5 ($3 after tax or $.01 per share) associated with the acquisition of Bolthouse Farms, which closed on August 6, 2012. The costs are included in Unallocated corporate expenses.
Reconciliation of GAAP to Non-GAAP Financial Measures
Fiscal Year Ended July 29, 2012
Campbell Soup Company uses certain non-GAAP financial measures as defined by the Securities and Exchange Commission in certain communications. These non-GAAP financial measures are measures of performance not defined by accounting principles generally accepted in the United States and should be considered in addition to, not in lieu of, GAAP reported measures.
Organic Net Sales
The company believes that organic net sales, which exclude the impact of currency, improves the comparability of year-to-year results. A reconciliation of net sales as reported to organic net sales follows.
Items Impacting Earnings
The company believes that financial information excluding certain transactions not considered to be part of the ongoing business improves the comparability of year-to-year results. Consequently, the company believes that investors may be able to better understand its earnings results if these transactions are excluded.
The following items impacted earnings:
The tables below reconcile financial information, presented in accordance with GAAP, to financial information excluding certain transactions:
Source: Campbell Soup Company
Campbell Soup CompanyAnthony Sanzio (Media)856-968-4390[email protected]orJennifer Driscoll (Analysts/Investors)856-342-6081[email protected]
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