Campbell Soup Company
Campbell Soup Company (NYSE:CPB) today reported diluted earnings per share for
the second quarter ended February 1, 2004 of $.57 compared to $.56 recorded in
the year-ago quarter.
For the second quarter, net sales rose 9 percent to $2.1 billion, driven by the
following:
-- Volume and mix increased 3 percent
-- Price added 2 percent
-- Increased promotional spending subtracted 1 percent
-- Currency added 5 percent
Net earnings for the second quarter of fiscal 2004 were $235 million versus $231
million a year earlier.
Diluted earnings per share for the first six months were $1.08, up 5 percent
versus $1.03 a year ago, before the cumulative effect of accounting change. In
fiscal 2003, the company recognized a one-time non-cash goodwill impairment
charge of $31 million after taxes, or 8 cents per share, related to the adoption
of SFAS No. 142.
Net sales were $4.0 billion for the first six months, an increase of 11 percent
compared with the year-ago period, reflecting the following factors:
-- Volume and mix increased 3 percent
-- Price added 2 percent
-- Currency added 5 percent
-- Acquisitions contributed 1 percent
For the first half of fiscal 2004, the company reportednet earnings of $446
million versus $423 million a year earlier before the cumulative effect of
accounting change.
Douglas R. Conant, Campbell's President and Chief Executive Officer, said, "We
again delivered solid financial performance in the quarter. We are successfully
executing our highest strategic priority of revitalizing our U.S. soup business.
We continue to generate excellent growth in our ready-to-serve soups and we are
encouraged by the improved performance of our condensed soups. Acrossthe
broader portfolio, we see many examples of strong marketplace performance,
including 'V8' beverages and 'Pepperidge Farm' in the U.S. and 'Arnott's' in
Australia."
Conant added, "Our strategy to drive improved top-line growth through
investments in higher quality products and packaging, convenience, and
integrated marketing is clearly paying off. Looking ahead, we will focus on
continuing this top-line momentum, while improving our margin structure."
Consistent with earlier guidance, the company expects earnings per share of
approximately $1.58 for fiscal 2004. In fiscal 2003, the company reported
earnings per share of $1.52 before the cumulative effect of accounting change.
For the third quarter of 2004, the company expects earnings per share to be
approximately $.31.
A summary of second quarter and first half segment results follows.
North America Soup and Away From Home
North America Soup and Away From Home sales increased 8 percent to $894 million
in the quarter compared to the year-ago period, driven by strong volume and mix
increases, offset by increased promotional spending. Operating earnings of $220
million were up 5 percent. Sales for the quarter break down as follows:
-- Volume and mix increased 5 percent
-- Price added 3 percent
-- Increased promotional spending subtracted 2 percent
-- Currency added 2 percent
Further details include the following:
-- Ready-to-serve soup sales increased 17 percent for the quarter on
shipment growth of 17 percent. This strong performance was driven by
significantly enhanced promotional activity behind "Campbell's Chunky"
canned soups, as well as the continued positive impact of the "M'm! M'm!
Good! To Go" convenience platform, which includes "Chunky" and "Select"
microwaveable bowls and "Soup At Hand," a line of convenient sippable
soups designed for out-of-home consumption.
-- Condensed soup sales were even with a year ago as higher prices offset a
2 percent decline in shipments during the quarter. "Campbell's" Chicken
Noodle soup achieved particularly strong shipment growth in the quarter,
offset by declines in cooking soups.
-- Broth sales declined 1 percent, as shipment growth of 1 percent was more
than offset by higher promotional spending.
For the first half of fiscal 2004, sales increased 8 percent to $1.7 billion
with currency contributing 2 percentage points of the growth. Operating earnings
increased7 percent to $441 million, compared to the year-ago period.
North America Sauces and Beverages
North America Sauces and Beverages sales rose 2 percent to $324 million in the
quarter and operating earnings decreased 14 percent to $72 million, due to
higher costs of packaging and ingredients, quality improvements and unfavorable
product mix. Sales for the quarter break down as follows:
-- Volume and mix increased 5 percent
-- Increased promotional spending subtracted 3 percent
Further details include the following:
-- Strong sales gains in beverages were generated by effective marketing
programs and new product introductions.
-- "Pace" Mexican sauce sales were solid, particularly around the Super
Bowl.
-- Sales of "Prego" pasta sauce declined slightly due in part to the
continued softness in the pasta category.
For the first half of fiscal 2004, sales rose 4 percent to $651 million compared
to the year-ago period. Operating earnings declined7 percent to $150 million,
due to higher costs of packaging and ingredients, quality improvements and
unfavorable product mix.
Biscuits and Confectionery
Biscuits and Confectionery sales increased 13 percent to $550 million in the
quarter and operating earnings rose 3 percent to $90 million. Sales for the
quarter break down as follows:
-- Volume and mix increased 2 percent
-- Price increases added 3 percent
-- Increased promotional spending subtracted 1 percent
-- Currency added 9 percent
Currency contributed 6 percentage points of the growth in operating earnings
during the quarter. In the year-ago period, operating earnings were favorably
impacted by an $8 million gain on the sale of a biscuit plant in Australia.
Further details include the following:
-- Pepperidge Farm delivered strong sales growth in cookies, crackers, and
bread, while frozen products declined. The cookie business grew behind
the introduction of Minis, smaller versions of Pepperidge Farm's most
popular cookies, and particularly strong sales during the holiday
season. Bread sales increased due to distribution gains in the mass
merchandise channel.
-- Godiva Chocolatier's worldwide sales increased, behind continued strong
growth in Asia. Same store sales trends in North America also improved
in the quarter.
-- Sales of "Arnott's" biscuits in Australia increased significantly in the
quarter, driven by strong performance of "Shapes," Australia's #1 snack
cracker, and chocolate varieties.
For the first half of fiscal 2004, sales rose 16 percent to $1.0 billion
compared to the year-ago period, with currency contributing 8 percentage points
of the growth. Operating earnings increased 5 percent, with currency
contributing 8 percentage points of the growth.
International Soup and Sauces
International Soup and Sauces sales rose 14 percent to $332 million and
operating earnings increased 15 percent to $39 million in the quarter. Sales for
the quarter break down as follows:
-- Volume and mix decreased 2 percent
-- Price added 1 percent
-- Reduced promotional spending added 1 percent
-- Currency added 15 percent
-- Divestiture subtracted 1 percent
Operating earnings growth was driven by favorable currency.
Further details include the following:
-- In Europe, branded sales grew for the second straight quarter led by
strong performance in Germany and France, offsetting private label
declines. In Germany, new single serve pouches of "Erasco" soups
performed well. In France, "Liebig" aseptic soups had strong sales
during the quarter.
-- In Asia Pacific, sales growth was driven by soup,broth and "V8"
beverages.
For the first half of fiscal 2004, sales increased 16 percent to $618 million,
compared to the year-ago period. Currency contributed 14 percentage points of
the sales growth. Operating earnings increased 23 percent to$74 million
compared to the year-ago period with currency contributing 15 percentage points
of the growth.
Conference Call
The company will host a conference call to discuss these results on February 23,
2004 at 10:00 a.m. Eastern Standard Time. U.S.participants may access the call
at 1-800-857-5156 and non-U.S. participants at 1-630-395-0021. Participants
should call at least five minutes prior to the starting time. The passcode is
Campbell Soup and the conference leader is Len Griehs. The call will also be
broadcast live over the Internet at http://www.campbellsoupcompany.com and can
be accessed by clicking on the Webcast banner. A recording of the call will be
available approximately two hours after it is completed through midnight
February 27, 2004 at 1-888-562-6139 or 1-402-280-9979.
Forward-Looking Statements
This release contains "forward-looking statements" which reflect the company's
current expectations about its future plans and performance, including
statements concerning the impact of marketing investments and strategies, new
product introductions, and quality improvements on sales and earnings. 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, sauce, beverage, biscuit, confectionery and prepared food products. The
Company is 135 years old, with nearly $7 billion in annual sales and a portfolio
of more than 20 market-leading brands. In NorthAmerica, leading brands include
"Campbell's" soups, "Swanson" broths, "Pepperidge Farm" cookies, crackers,
breads and frozen products, "V8" vegetable juices, "V8 Splash" juice beverages,
"Pace" Mexican sauces, "Prego" pasta sauces, and "Franco-American"canned pastas
and gravies. In Europe, leading brands include "Erasco" soups in Germany and
"Liebig" soups in France, and several dry soup and sauce brands: "Batchelors,"
"Oxo," "Lesieur," "Royco," "Liebig," "Heisse Tasse," "Bla Band," "Erin," and
"McDonnells." Additional European brands include "Homepride" sauces and "Fray
Bentos" canned meats in the United Kingdom, and "Devos Lemmens" mayonnaise and
cold sauces in Belgium and France. In the Asia Pacific region, the company
markets "Arnott's" biscuits, "Campbell's" soups, and "Swanson" broths. "Godiva"
chocolates are sold around the world. The company is ably supported by 25,000
full-time employees worldwide. For more information on the company, visit
Campbell's website on the Internet at www.campbellsoupcompany.com.
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF EARNINGS (unaudited)
(millions, except per share amounts)
THREE MONTHS ENDED
--------------------------
February January
1, 2004 26, 2003
------------ ------------
Net sales $ 2,100 $ 1,918
------------ ------------
Costs and expenses
Cost of products sold 1,212 1,056
Marketing and selling
expenses 340 329
Administrative expenses 136 128
Research and development
expenses 21 21
Other expenses 2 (1)
------------ ------------
Total costs and expenses 1,711 1,533
------------ ------------
Earnings before interest and taxes 389 385
Interest, net 42 46
------------ ------------
Earnings before taxes 347 339
Taxes on earnings 112 108
------------ ------------
Net earnings $ 235 $ 231
============ ============
Per share - basic
Net earnings $ .57 $ .56
============ ============
Dividends $ .1575 $ .1575
============ ============
Weighted average shares outstanding - basic 411 411
============ ============
Per share - assuming dilution
Net earnings $ .57 $ .56
============ ============
Weighted average shares outstanding
- assuming dilution 412 411
============ ============
Certain reclassifications were made to prior year financial
statements.
CAMPBELL SOUP COMPANYCONSOLIDATED
STATEMENTS OF EARNINGS (unaudited)
(millions, except per share amounts)
SIX MONTHS ENDED
--------------------------
February January
1, 2004 26, 2003
------------ ------------
Net sales $ 4,009 $ 3,623
------------ ------------
Costs and expenses
Cost of products sold 2,320 2,027
Marketing and selling
expenses 633 603
Administrative expenses 259 236
Research and development
expenses 42 40
Other expenses 12 2
------------ ------------
Total costs and expenses 3,266 2,908
------------ ------------
Earnings before interest and taxes 743 715
Interest, net 85 91
------------ ------------
Earnings before taxes 658 624
Taxes on earnings 212 201
------------ ------------
Earnings before cumulative
effect of accounting change 446 423
Cumulative effect of accounting change - (31)
------------ ------------
Net earnings $ 446 $ 392
============ ============
Per share - basic
Earnings before cumulative
effect of accounting change $ 1.08 $ 1.03
Cumulative effect of accounting change - (.08)
------------ ------------
Net earnings $ 1.08 $ .95
============ ============
Dividends $ .315 $ .315
============ ============
Weighted average shares outstanding - basic 411 411
============ ============
Per share - assuming dilution
Earnings before cumulative
effect of accounting change $ 1.08 $ 1.03
Cumulative effect of accounting change - (.08)
------------ ------------
Net earnings $ 1.08 $ .95
============ ============
Weighted average shares outstanding
- assuming dilution 412 411
============ ============
In connection with the adoption of Statement of Financial Accounting
Standards No. 142 "Goodwill and Other Intangible Assets," the company
recognized a non-cash charge of $31 (net of a $17 tax benefit) as a
cumulative effect of accounting change for the write-down of goodwill
of one business unit in the first quarter of fiscal 2003.
Certain reclassifications were made to prior year financial
statements.
CAMPBELL SOUP COMPANY CONSOLIDATED
SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share amounts)
THREE MONTHS ENDED
------------------
February January Percent
Sales 1, 2004 26, 2003 Change
----- -------- -------- -------
Contributions:
North America Soup and Away
FromHome $ 894 $ 824 8%
North America Sauces and
Beverages 324 318 2%
Biscuits and Confectionery 550 486 13%
International Soup and
Sauces 332 290 14%
-------- --------
Total sales $ 2,100 $ 1,918 9%
======== ========
Earnings
--------
Contributions:
North America Soup and Away
From Home $ 220 $ 209 5%
North America Sauces and
Beverages 72 84 -14%
Biscuits and Confectionery 90 87 3%
International Soup and
Sauces 39 34 15%
-------- --------
Total operating earnings 421 414 2%
Unallocated corporate expenses (32) (29)
-------- --------
Earnings before interest and
taxes 389385 1%
Interest, net (42) (46)
Taxes on earnings (112) (108)
-------- --------
Net earnings $ 235 $ 231 2%
======== ========
Net earnings per share -
assuming dilution $ .57 $ .56 2%
======== ========
CAMPBELL SOUP COMPANY CONSOLIDATED
SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share amounts)
SIX MONTHS ENDED
------------------
February January Percent
Sales 1, 2004 26, 2003 Change
----- -------- -------- -------
Contributions:
North America Soup and Away
From Home $ 1,699 $ 1,570 8%
North America Sauces and
Beverages 651 625 4%
Biscuits and Confectionery 1,041 896 16%
International Soup and
Sauces 618 532 16%
-------- --------
Total sales $ 4,009 $ 3,623 11%
======== ========
Earnings
--------
Contributions:
North America Soup and Away
From Home $ 441 $ 414 7%
North America Sauces and
Beverages 150 161 -7%
Biscuits and Confectionery 136 129 5%
International Soup and
Sauces 74 60 23%
-------- --------
Total operating earnings 801 764 5%
Unallocated corporate expenses (58) (49)
-------- --------
Earnings before interest and
taxes 743 715 4%
Interest, net (85) (91)
Taxes on earnings (212) (201)
-------- --------
Earnings before cumulative
effect of accounting
change 446 423 5%
Cumulative effect of
accounting change - (31)
-------- --------
Net earnings $ 446 $ 392 14%
======== ========
Net earnings per share before
cumulative effect of
accounting change
- assuming dilution $ 1.08 $ 1.03 5%
======== ========
In connection with the adoption of SFAS No. 142, the company
recognized a non-cash charge of $31 (net of a $17 tax benefit), or
$.08 per share, as a cumulative effect of accounting change for the
write-down of goodwill of one business unit in the first quarter of
fiscal 2003.
CAMPBELL SOUP COMPANY CONSOLIDATED
BALANCE SHEETS (unaudited)
(millions)
February January
1, 2004 26, 2003
---------- ----------
Currentassets $ 1,541 $ 1,484
Plant assets, net 1,871 1,757
Intangible assets, net 3,081 2,748
Other assets 303 298
---------- ----------
Total assets $ 6,796 $ 6,287
========== ==========
Current liabilities $ 2,502 $ 3,034
Long-term debt 2,566 2,270
Nonpension postretirement benefits 301 314
Other liabilities 559 430
Shareowners' equity 868 239
---------- ----------
Total liabilities and shareowners' equity $ 6,796 $ 6,287
========== ==========
Total debt $ 3,474 $ 3,627
========== ==========
Cash and cash equivalents $ 41 $ 37
========== ==========
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