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TheStreet Open House

Campbell Reports Second-Quarter Results

For the first half of fiscal 2013, sales were $4.669 billion, an increase of 9 percent from the year-ago period. The change in sales for the period reflected the following factors*:

  • The acquisition of Bolthouse Farms added 9 percent
  • Price and sales allowances added 2 percent
  • Increased promotional spending subtracted 1 percent

* Does not add due to rounding

First-Half Financial Details

  • Gross margin was 36.1 percent compared with 39.0 percent a year ago. Excluding restructuring-related charges, adjusted gross margin in the first half was 37.4 percent. The decline in gross margin was primarily attributable to the acquisition of Bolthouse Farms.
  • Marketing and selling expenses decreased 1 percent to $551 million compared with $558 million in the prior year. The decline was primarily due to lower marketing expenses, principally reductions in advertising and consumer promotion expenses, partly offset by the impact of the addition of Bolthouse Farms expenses and higher selling expenses.
  • Administrative expenses increased $37 million to $334 million, primarily due to the acquisition of Bolthouse Farms as well as higher compensation and benefit costs, including pension expenses.
  • EBIT was $686 million compared with $745 million in the prior year. Excluding restructuring, restructuring-related charges and acquisition transaction costs, adjusted EBIT increased 5 percent to $787 million. Excluding Bolthouse Farms’ operating results, adjusted EBIT increased 1 percent, primarily driven by lower marketing expenses, partially offset by higher selling and administrative expenses.
  • Adjusted net earnings for the first half increased 5 percent to $499 million, as the impact of higher interest expenses was offset by a lower tax rate. Adjusted net earnings per share were $1.58 in the first half compared with net earnings per share of $1.46 in the prior year, an increase of 8 percent. Earnings per share benefitted from fewer shares outstanding.
  • Cash flow from operations was $499 million compared with $478 million in the prior year.
  • Net debt rose to $4.019 billion, an increase of $1.463 billion, primarily due to funding the $1.570 billion purchase of Bolthouse Farms.

Summary of Fiscal 2013 Second-Quarter and First-Half Results by Segment

U.S. Simple Meals

Sales for U.S. Simple Meals were $833 million for the second quarter, an increase of 1 percent compared with the year-ago period. A breakdown of the change in sales follows:

  • Volume and mix subtracted 1 percent
  • Price and sales allowances added 2 percent

U.S. Soup sales increased 1 percent compared to the year-ago quarter. Sales were negatively impacted by a decline in retailer inventory levels.

  • Sales of “Campbell’s” condensed soups increased 1 percent, driven by gains in eating varieties. Sales of cooking varieties were comparable to the year-ago quarter.
  • Sales of ready-to-serve soups increased 8 percent, primarily driven by double-digit volume gains in “Campbell’s Chunky” canned soups and the benefit of new items across the portfolio, slightly offset by declines in microwavable soups.
  • Broth sales decreased 12 percent, primarily due to declines in canned broth, reflecting earlier holiday shipments in the prior quarter.

Sales of U.S. Sauces were comparable to the prior-year quarter as lower sales in “Prego” pasta sauce and “Chunky” chili were offset by gains in “Swanson” canned poultry, “Campbell’s” canned pasta, “Pace” Mexican sauce and new “Campbell’s” Skillet Sauces.

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