Fourth-Quarter Adjusted Net Earnings Per Share Increased 30 Percent to $0.43Full-Year Adjusted Net Earnings Per Share Increased 3 Percent to $2.54
CAMDEN, N.J., Sep 02, 2011 (BUSINESS WIRE) — Campbell Soup Company (NYSE: CPB) today 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.”
Fiscal 2012 Guidance
Campbell’s fiscal year 2011 results were slightly ahead of the guidance issued in July 2011. As a result, the company is adjusting its forecasted 2012 growth rates. Campbell now expects net sales growth to be between 0 and 2 percent, a decline in adjusted EBIT of between (9) and (7) percent and a decline in adjusted EPS of between (7) and (5) percent from the adjusted base of $2.54. These growth rates maintain planned fiscal 2012 levels of spending on innovation and brand building. The rates also exclude the impact in fiscal 2012 of the previously announced restructuring program.
New Reportable Segments
Beginning with the fourth quarter of fiscal 2011, Campbell will report the results of its operations in the following five reportable segments: U.S. Simple Meals, U.S. Beverages, Global Baking and Snacking, International Simple Meals and Beverages and North America Foodservice. Previously, U.S. Simple Meals and U.S. Beverages were combined and reported as U.S. Soup, Sauces and Beverages. Additionally, the Baking and Snacking segment has been renamed as Global Baking and Snacking, and the International Soup, Sauces and Beverages segment has been renamed as International Simple Meals and Beverages. Segment results of prior periods have been revised to conform to the current presentation.
On June 28, 2011, Campbell announced a series of initiatives to improve supply chain efficiency and reduce overhead costs across the company, as well as its plans to close its Moscow office and exit the Russian market. In the fourth quarter, Campbell recorded pre-tax restructuring costs of $63 million, $41 million after-tax or $0.12 per share, related to these initiatives.
For the fourth quarter, sales increased 6 percent to $1.607 billion. The increase in sales for the quarter reflected the following factors:
Fourth-Quarter Financial Details
Net earnings for the fiscal year were $805 million, or $2.42 per share, compared with $844 million, or $2.42 per share, in the year-ago period. Excluding items impacting comparability in both periods, adjusted net earnings declined 2 percent to $846 million compared to adjusted net earnings of $862 million, and adjusted net earnings per share increased 3 percent to $2.54 in the current year versus an adjusted $2.47 per share in the prior year.
Sales for the fiscal year were $7.719 billion, an increase of 1 percent from the prior year. The change in sales for the yearreflected the following factors:
Full-Year Financial Details
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:
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 “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:
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.
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:
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:
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:
Further details of sales results include the following:
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:
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:
Excluding the impact of currency, higher sales in Europe and Canada were offset by declines in the Asia Pacific region and Latin America.
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:
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:
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:
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.
Unallocated Corporate Expenses
Unallocated corporate expenses were $31 million versus $34 million a year ago. Unallocated expenses for the full year were $119 million compared to $121 million in the prior year.
Non-GAAP Financial Information
A detailedreconciliation of the adjusted financial information to the reported financial information is included at the end of this news release.
The company will host a conference call to discuss these results on Sept. 2, 2011, at 10:00 a.m. Eastern Daylight Time. U.S. participants may access the call at 1-866-219-5260 and non-U.S. participants at 1-703-639-1117. Participants should call at least five 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 replay of the conference call will be available through midnight, Sept. 16, 2011, by dialing 1-888-266-2081 or 1-703-925-2533. The access code is 1548665.
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.
U.S. Beverages represents the following products: “V8” vegetable juices, “V8 V-Fusion” juices, “V8 Splash” juice beverages, and “Campbell’s” tomato juice.
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, Mexico, Latin America, the Asia Pacific region and the retail business in Canada.
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” and “V8.” 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 ofportfolio changes; (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.
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 2010, the company recorded pre-tax restructuring charges of $12 ($8 after tax or $.02 per share) for pension benefit costs associated with the initiatives announced in April 2008 to improve operational efficiency.
In fiscal 2010, the company recorded deferred tax expense of $10 (or $.03 per share) due to the enactment of U.S. health care legislation in March 2010.
In fiscal 2011, restructuring charges are excluded from segment operating earnings. The prior year results were modified to conform to the current presentation.
Reconciliation of GAAP and Non-GAAP Financial Measures
Fiscal Year Ended July 31, 2011
Organic Net Sales
Items Impacting Earnings
In fiscal 2008, the company announced initiatives to improve operational efficiency and long-term profitability, including selling certain salty snack food brands and assets in Australia, closing certain production facilities in Australia and Canada, and streamlining the company’s management structure. In the third quarter of fiscal 2010, the company recorded pre-tax restructuring charges of $12 million ($8 million after tax or $0.02 per share) for pension benefit costs related to these initiatives.
Aug. 1, 2010
Restructuring charges (1)
Tax benefit from restructuring charges (1)
Net adjustment from restructuring charges (1)
Tax expense from health care legislation (2)
SOURCE: Campbell Soup Company
Campbell Soup CompanyAnthony Sanzio (Media)856-968-4390orJennifer Driscoll (Analysts/Investors)856-342-6081
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