Campbell Soup Company
Jerry S. Buckley (Media), 856-342-6007
Leonard F. Griehs (Analysts), 856-342-6428
Campbell Reports First Quarter Earnings Per Share of $.51
Campbell Soup Company (NYSE:CPB) today reported diluted earnings per
share for the first quarter ended November 2, 2003 of $.51. This
result compares to $.47 recorded in the year-ago quarter, which was
before the cumulative effect of accounting change. In the year-ago
quarter, the company reported a one-time non-cash accounting charge of
$.08 per share related to the adoption of SFAS No. 142.
For the first quarter, net sales rose 12 percent to $1,909 million.
Earnings before interest and taxes were $354 million, up 7 percent
versus the year-ago quarter. Sales for the quarter reflect the
following:
-- Volume and mix increased 2 percent
-- Price added 2 percent
-- Reduced promotional spending added 2 percent
-- Currency added 4 percent
-- Acquisitions contributed 2 percent
Net earnings were $211 million versus $192 million a year earlier
before the cumulative effect of accounting change.
Douglas R. Conant, Campbell's President and Chief Executive Officer,
said, "We have delivered a good first quarter and we are on target to
deliver our earnings for the year. Our highest priority is to
revitalize our U.S. soup business through the introduction of more
convenient, higher quality products. Strong consumer demand in the
quarter for our 'M'm! M'm! Good! To Go' line of ready-to-serve soups
in microwavable containers, including Campbell's 'Soup at Hand,'
'Chunky,' and 'Select' soups, demonstrates that our strategy is on
target. In fact, consumer acceptance has significantly exceeded our
expectations and we are now working to increase our production
capacity.
"While our focus has been on successfully launching our soup
convenience platform, we recognize the intense competitive activity in
the marketplace, including broader price discounting. Despite this
heavy promotional spending by competition, our key convenience brands
- 'Chunky,' 'Select,' and 'Soup at Hand' - in aggregate grew shipments
in excess of 10 percent. We are confident that we have strong,
competitive promotional programs in place in our more traditional
ready-to-serve and condensed businesses as we enter the peak months of
the soup season."
Conant added, "In our broader portfolio beyond soup, we are seeing
many examples of strong marketplace performance, including 'V8'
beverages, 'Pepperidge Farm,' 'Arnott's,' and our dry soup businesses
in Europe. The investments we are making in quality, packaging, new
products, and improved marketing are having an impact."
For the second quarter of fiscal 2004, the company expects earnings
per share to be in the range of $.52 to $.54, which is below prior
year due to planned marketing investment. The company is maintaining
its earnings per share guidance for fiscal 2004 at approximately
$1.58. In fiscal 2003, the company reported earnings per share of
$1.52, before the cumulative effect of accounting change.
A summary of segment results for the first quarter follows.
North America Soup and Away From Home
North America Soup and Away From Home sales of $805 million were up 8
percent, driven by price increases on U.S. condensed soup and lower
promotional spending. Operating earnings of $221 million were up 8
percent. Sales for the quarter break down as follows:
-- Volume and mix were even with year ago
-- Price added 2 percent
-- Reduced promotional spending added 4 percent
-- Currency added 2 percent
In the U.S., ready-to-serve shipments rose 6 percent, condensed
shipments declined 7 percent and broth shipments rose 14 percent.
Further details include the following:
-- The "M'm! M'm! Good! To Go" convenience platform delivered
strong performance. Seven new varieties of Campbell's "Soup at
Hand" soups were launched, bringing that line to 11 varieties;
4 varieties of "Campbell's Select" soups and 6 varieties of
"Campbell's Chunky" soups in microwavable bowls were also
launched.
-- Gravity-fed shelving systems for condensed soup continue to be
installed in new store locations. To date, fixtures are in
approximately 2,800 stores, which represent approximately 10
percent of grocery all commodity volume (ACV). Test results in
the first quarter have been positive.
-- Away From Home sales increased, driven by strong soup sales.
-- Canadian soup sales, excluding the impact of currency, were
down slightly due to start up issues related to the transition
to a new distribution partner.
North America Sauces and Beverages
North America Sauces and Beverages sales rose 7 percent to $327
million and operating earnings increased 1 percent to $78 million.
Sales for the quarter break down as follows:
-- Volume and mix increased 3 percent
-- Reduced promotional spending added 4 percent
Further details include the following:
-- Sales were driven by outstanding performance on "V8" vegetable
juice, the growth of "V8 Splash" Smoothies, which were
introduced in the second-half of last year, as well as reduced
promotional spending.
-- "V8" vegetable juice performance was driven by new advertising
created around the "Drink Smarter" advertising campaign and
new varieties. "Campbell's" tomato juice, which introduced its
first organic variety during the quarter, continued to post
solid growth.
-- "Prego" pasta sauces experienced a decline in sales due in
part to weaknesses across the entire Italian sauce category.
Biscuits and Confectionery
Biscuits and Confectionery sales increased 20 percent to $491 million
and operating earnings rose 10 percent to $46 million. Sales for the
quarter break down as follows:
-- Volume and mix increased 5 percent
-- Price increases added 3 percent
-- Currency added 6 percent
-- Acquisitions contributed 6 percent
Operating earnings were driven primarily by currency and acquisitions.
Further details include the following:
-- Pepperidge Farm sales growth was driven by strong cookie
sales. Consumer response to new Mini Cookies has been
excellent and seasonal cookie assortments have achieved strong
growth heading into the holiday period.
-- Pepperidge Farm fresh bread sales continued to increase driven
by distribution gains in the mass merchandise channel. Both
"Swirl" and "Farmhouse" breads contributed strong sales
growth.
-- Godiva Chocolatier's worldwide sales were ahead of last year
due to a recovery in Asia Pacific and the worldwide duty free
business. Godiva also saw strong growth in its direct sales,
which includes internet and catalog. Comparable store sales in
the U.S. were negative versus a year ago.
-- Arnott's had an excellent quarter, delivering strong sales
growth in biscuits. Three biscuit brands were added to the
Arnott's portfolio during the quarter, following their
acquisition from George Weston Foods Limited.
International Soup and Sauces
International Soup and Sauces sales rose 18 percent to $286
million, and operating earnings rose 35 percent to $35 million. Sales
for the quarter break down as follows:
-- Volume and mix increased 8 percent
-- Price subtracted 1 percent
-- Promotions subtracted 2 percent
-- Currency added 12 percent
-- Acquisitions added 1 percent
Operating earnings growth was driven primarily by volume gains and
currency.
Further details include the following:
-- In Europe, dry soup brands performed well in the quarter.
-- In the U.K., highlights included the re-launch of two improved
product lines: "Batchelors Cup-A-Soup" and "OXO" gravy
products, supported by strong advertising campaigns. However,
wet soup and sauce sales continued to decline.
-- In Germany, improved mix and stronger branded performance
overcame declines in private label business.
-- In Asia Pacific, soup sales rose significantly across the
region. In Australia, sales gains were driven by new product
introductions and strong performance in broth, including new
varieties and marketing programs designed to drive expanded
usage occasions.
Conference Call
The company will host a conference call to discuss these results on
November 24, 2003 at 10:00 a.m. Eastern Standard Time. U.S.
participants may access the call at 1-888-603-6970 and non-U.S.
participants at 1-210-839-8500. 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.campbellsoup.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 November 28, 2003 at 1-800-938-1164 or
1-402-998-0567.
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, sauces, beverage, biscuits, confectionery and prepared
food products. The company is 134 years old, with nearly $7 billion in
annual sales and a portfolio of more than 20 market-leading brands. In
North America, leading brands include "Campbell's" soups and "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 the company also has
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 stock, 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 at www.campbellsoup.com.
CONTACT: Campbell Soup Company
Jerry S. Buckley (Media), 856-342-6007
Leonard F. Griehs (Analysts), 856-342-6428
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF EARNINGS (unaudited)
(millions, except per share amounts)
THREE MONTHS ENDED
------------------
November October
2, 2003 27, 2002
------------ ------------
Net sales $ 1,909 $ 1,705
------------ ------------
Costs and expenses
Cost of products sold 1,108 971
Marketing and selling
expenses 293 274
Administrative expenses 123 108
Research and development
expenses 21 19
Other expenses 10 3
------------ ------------
Total costs and expenses 1,555 1,375
------------ ------------
Earnings before interest and taxes 354 330
Interest, net 43 45
------------ ------------
Earnings before taxes 311 285
Taxes on earnings 100 93
------------ ------------
Earnings before cumulative
effect of accounting change 211 192
Cumulative effect of accounting change - (31)
------------ ------------
Net earnings $ 211 $ 161
============ ============
Per share - basic
Earnings before cumulative
effect of accounting change $ .51 $ .47
Cumulative effect of accounting change - (.08)
------------ ------------
Net earnings $ .51 $ .39
============ ============
Dividends $ .1575 $ .1575
============ ============
Weighted average shares outstanding - basic 411 410
============ ============
Per share - assuming dilution
Earnings before cumulative
effect of accounting change $ .51 $ .47
Cumulative effect of accounting change - (.08)
------------ ------------
Net earnings $ .51 $ .39
============ ============
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
------------------
November October Percent
Sales 2, 2003 27, 2002 Change
----- -------- -------- -------
Contributions:
North America Soup and Away
From Home $ 805 $ 746 8%
North America Sauces and
Beverages 327 307 7%
Biscuits and Confectionery 491 410 20%
International Soup and
Sauces 286 242 18%
-------- --------
Total sales $ 1,909 $ 1,705 12%
======== ========
Earnings
--------
Contributions:
North America Soup and Away
From Home $ 221 $ 205 8%
North America Sauces and
Beverages 78 77 1%
Biscuits and Confectionery 46 42 10%
International Soup and
Sauces 35 26 35%
-------- --------
Total operating earnings 380 350 9%
Unallocated corporate expenses (26) (20)
-------- --------
Earnings before interest and
taxes 354 330 7%
Interest, net (43) (45)
Taxes on earnings (100) (93)
-------- --------
Earnings before cumulative
effect of accounting
change 211 192 10%
Cumulative effect of
accounting change - (31)
-------- --------
Net earnings $ 211 $ 161 31%
======== ========
Net earnings per share before
cumulative effect of
accounting change
- assuming dilution $ .51 $ .47 9%
======== ========
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)
November October
2, 2003 27, 2002
---------- ----------
Current assets $ 1,655 $ 1,577
Plant assets, net 1,846 1,736
Intangible assets, net 2,937 2,622
Other assets 305 315
---------- ----------
Total assets $ 6,743 $ 6,250
========== ==========
Current liabilities $ 2,763 $ 3,702
Long-term debt 2,556 1,860
Nonpension postretirement benefits 304 317
Other liabilities 505 368
Shareowners' equity 615 3
---------- ----------
Total liabilities and shareowners' equity $ 6,743 $ 6,250
========== ==========
Total debt $ 3,724 $ 3,907
========== ==========
Cash and cash equivalents $ 39 $ 41
========== ==========
