Campbell Soup Company (NYSE: CPB) today reported diluted earnings per share of $.65 for the second quarter ended January 28, 2001, even with the same period last year. Net sales in the quarter increased 2 percent to $2 billion, a 5 percent increase before the impact of currency and divestitures. This performance was largely driven by significant improvement in the U.S. soup business, which resulted from increased marketing investments, including the “M’m! M’m! Good!” advertising campaign, and more seasonable winter weather. For the quarter, U.S. soup consumer purchases increased 5 percent. For the first six months of the fiscal year, U.S. soup consumer purchases increased 4 percent. As expected, net earnings for the quarter declined 4 percent to $271 million compared to $281 million a year earlier due to continued increases in marketing investment.
“We’re pleased with the improving trends in our core businesses. Our revitalization efforts in U.S. soup are gaining traction. And our indulgent snacking businesses, Pepperidge Farm, Godiva and Arnotts, are also displaying good momentum,” said Douglas R. Conant, Campbell’s President and Chief Executive Officer. “These results demonstrate the strength of our brands and the impact of our expanded marketing programs. We are reaching consumers and they are responding.” Conant added, “We are also encouraged by the performance of several businesses outside the U.S. and are excited about expanding our global franchise as a result of our agreement to acquire key European culinary brands from Unilever.”
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On January 29, 2001, the company announced an agreement to acquire several market-leading soup and sauce businesses in Europe from Unilever for approximately 1 billion Euros or $950 million U.S. dollars. The acquisition is subject to European regulatory approval and other customary conditions.
The company also reported today:
- Gross margin improved to 56 percent from 55.7 percent as U.S. soup volume increased and cost productivity programs continued, more than offsetting the impact of inflation on manufacturing costs.
- Year-to-date, free cash flow increased to $682 million. This strong free cash flow was driven by a reduction in operating working capital of more than $200 million.
- As previously announced, the company expects earnings per share for the year to be essentially flat compared with last year. Based on the success of targeted marketing initiatives in the first half, the company intends to increase marketing spending above planned spending levels in selected U.S. businesses in the second half of fiscal 2001. Third quarter earnings are expected to be in the $.28-$.30 range.
A summary of fiscal 2001 second quarter results by segment follows:
Soup and Sauces
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By GlobalDataSales for the quarter increased 2 percent to $1.4 billion, up 4 percent before the impact of currency. Operating earnings declined 5 percent before currency, to $382 million, due to the increased marketing investments.
A 6 percent increase in U.S. soup shipments contributed to the worldwide wet soup shipment increase of 4 percent for the quarter. The U.S. soup gains were led by “Chunky,” with exceptionally strong performance, and the introduction of easy-open tops on all ready-to-serve varieties, including new “Campbell’s Ready to Serve” classics.
Outside the U.S., wet soup shipments declined 1 percent, due primarily to weakness in Canada. In Europe, two new soup products were launched, including an aseptic-packaged soup in Belgium and a “Homepride”-branded bottled soup in the U.K. In Asia Pacific, Australia continued to deliver strong soup performance, bolstered by the introduction of new products.
In U.S. sauces, “Prego” pasta sauces reported continued gains in a highly competitive category, showing increases in both consumer purchases and market share. “Pace” sauces also reported gains in consumer purchases, but market share declined slightly. Total beverage sales increased during the quarter, driven by gains in consumer purchases of “V8” and “V8 Splash,” strengthened by new “Diet V8 Splash.”
Biscuits and Confectionery
Biscuits and Confectionery was strong across the board. Sales for the quarter increased 5 percent to $441 million, up 10 percent before the impact of currency. Operating earnings were up 17 percent, 20 percent before currency, to $91 million reflecting the impact of volume growth that resulted from marketing investments and improved product mix and cost productivity. Pepperidge Farm reported strong sales and earnings driven by good performance in “Goldfish” and new “Giant Goldfish” crackers and the introduction of new “Spritzers” cookies. Frozen and bakery products also reported gains.
Godiva Chocolatier delivered another outstanding performance with a record-breaking holiday season that drove double-digit sales and earnings growth in all geographic regions and channels.
Arnotts strong performance was driven by share growth in its core brands “Shapes,” “Tim Tam” and “Kettle” and continued success with new products.
Away From Home
Away From Home reported sales for the quarter increased 2 percent to $146 million, up 3 percent before the impact of currency, led by increases in frozen soup. The division reported expanded distribution of “Campbell’s” branded soup in quick-service restaurants and increased placements of “Campbell’s” kettles in high-traffic venues such as colleges and universities. In addition, beverage sales were strong, driven by both “V8” and “V8 Splash.” Operating earnings increased 11 percent to $18 million due to favorable product mix and improved cost productivity.
Forward-Looking Statements
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. Actual results could vary materially from those anticipated or expressed in any forward-looking statement made by the company. Please refer to the company’s most recent Form 10-K and subsequent filings for a further discussion of these risks and uncertainties. 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, beverages, 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 is ably supported by more than 22,000 employees worldwide. For more information on the company, visit Campbell’s website on the Internet at www.campbellsoup.com.
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF EARNINGS (unaudited)
(millions, except per share amounts)
THREE MONTHS ENDED
January January
28, 2001 30, 2000
Net sales $ 1,957 $ 1,916
Costs and expenses
Cost of products sold 862 848
Selling, general and
administrative expenses 635 595
Total costs and expenses 1,497 1,443
Earnings before interest and taxes 460 473
Interest, net 49 50
Earnings before taxes 411 423
Taxes on earnings 140 142
Net earnings $ 271 $ 281
Per share – basic
Net earnings $ 0.65 $ 0.66
Dividends $ .225 $ .225
Weighted average shares outstanding
– basic 415 427
Per share – assuming dilution
Net earnings $ 0.65 $ 0.65
Weighted average shares outstanding
– assuming dilution 419 431
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF EARNINGS (unaudited)
(millions, except per share amounts)
SIX MONTHS ENDED
January January
28, 2001 30, 2000
Net sales $ 3,735 $ 3,684
Costs and expenses
Cost of products sold 1,669 1,657
Selling, general and
administrative expenses 1,243 1,143
Total costs and expenses 2,912 2,800
Earnings before interest and taxes 823 884
Interest, net 101 96
Earnings before taxes 722 788
Taxes on earnings 247 272
Net earnings $ 475 $ 516
Per share – basic
Net earnings $ 1.14 $ 1.21
Dividends $ .450 $ .450
Weighted average shares outstanding
– basic 418 428
Per share – assuming dilution
Net earnings $ 1.12 $ 1.19
Weighted average shares outstanding
– assuming dilution 425 432
CAMPBELL SOUP COMPANY CONSOLIDATED
SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share amounts)
THREE MONTHS ENDED
January January Percent
Sales 28, 2001 30, 2000 Change
Contributions:
Soup and Sauces $ 1,386.6 $ 1,361.5 2%
Biscuits and Confectionery 440.5 419.1 5%
Away From Home 146.2 143.0 2%
Sub-total 1,973.3 1,923.6 3%
Other 1.5 8.6
Intersegment (18.3) (16.4)
Total sales $ 1,956.5 $ 1,915.8 2%
Earnings
Contributions:
Soup and Sauces $ 381.5 $ 406.0 -6%
Biscuits and Confectionery 91.0 77.9 17%
Away From Home 18.3 16.5 11%
Sub-total 490.8 500.4 -2%
Other 0.2 0.5
Total operating earnings 491.0 500.9 -2%
Unallocated corporate expenses (31.0) (27.9)
Earnings before interest and taxes 460.0 473.0 -3%
Interest, net (49.3) (49.7)
Taxes on earnings (139.7) (142.4)
Net earnings $ 271.0 $ 280.9 -4%
Net earnings per share – assuming
dilution $ .65 $ .65 –
CAMPBELL SOUP COMPANY CONSOLIDATED
SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share amounts)
SIX MONTHS ENDED
January January Percent
Sales 28, 2001 30, 2000 Change
Contributions:
Soup and Sauces $ 2,656.5 $ 2,625.1 1%
Biscuits and Confectionery 830.3 793.0 5%
Away From Home 281.5 278.2 1%
Sub-total 3,768.3 3,696.3 2%
Other 2.7 21.7
Intersegment (36.3) (33.7)
Total sales $ 3,734.7 $ 3,684.3 1%
Earnings
Contributions:
Soup and Sauces $ 707.2 $ 763.5 -7%
Biscuits and Confectionery 138.5 135.8 2%
Away From Home 33.8 30.9 9%
Sub-total 879.5 930.2 -5%
Other 0.5 1.6
Total operating earnings 880.0 931.8 -6%
Unallocated corporate expenses (57.5) (48.0)
Earnings before interest and
taxes 822.5 883.8 -7%
Interest, net (100.8) (95.7)
Taxes on earnings (246.9) (271.9)
Net earnings $ 474.8 $ 516.2 -8%
Net earnings per share – assuming
dilution $ 1.12 $ 1.19 -6%
CAMPBELL SOUP COMPANY CONSOLIDATED
BALANCE SHEETS (unaudited)
(millions)
January January
28, 2001 30, 2000
Current assets $ 1,229 $ 1,439
Plant assets, net 1,570 1,678
Intangible assets, net 1,704 1,844
Other assets 591 603
Total assets $ 5,094 $ 5,564
Current liabilities $ 2,732 $ 3,149
Long-term debt 1,742 1,336
Nonpension postretirement benefits 350 384
Other liabilities 461 430
Shareowners’ equity (191) 265
Total liabilities and shareowners’
equity $ 5,094 $ 5,564
Total debt $ 3,175 $ 3,210
Net debt $ 3,137 $ 3,118
