Campbell Soup Co. reported its results for the third quarter of fiscal 2011.
Net earnings for the quarter ended May 1, 2011, were $187 million, or $0.57 per share, compared with $168 million, or $0.49 per share, in the prior year. Excluding items impacting comparability in the prior year, net earnings per share increased 6 percent in the current quarter from adjusted net earnings per share of $0.54 in the prior period. The prior year quarter's reported net earnings included adjustments related to a completed restructuring program and a deferred tax expense related to the enactment of U.S. health care legislation in March 2010. A detailed reconciliation of the prior-year adjusted financial information to the reported information is included at the end of this news release.
Denise Morrison, Campbell's chief operating officer, said in a prepared statement, "This quarter we reported a modest increase in sales and EBIT and a significant improvement in earnings per share growth, with three of our four reporting segments contributing to this performance. While we are encouraged by our progress, we are not satisfied with this performance and clearly have more work to do.
"After heavy discounting in U.S. soup during the first half, we began shifting our marketing investments in the third quarter toward brand building initiatives. Over time we anticipate that these efforts, combined with accelerated and targeted innovation, will improve price realization and strengthen brand equity. Sales of our beverage products softened this quarter compared to very strong results a year ago. We have a pipeline of healthy beverage innovations to build on our track record of growth. In Baking and Snacking, our second-largest segment, we continued to deliver strong performance with double-digit sales increases and strong bottom-line results this quarter."
Morrison concluded, "We remain focused on our plans to stabilize and then profitably grow net sales, and we are stepping up our game across the company with plans that include innovation, brand marketing excellence, superior consumer insights and relentless cost management."
For the third quarter, sales increased 1 percent to $1.813 billion. The increase in sales for the quarter reflected the following factors:
- Volume and mix subtracted 2 percent;
- Price and sales allowances added 1 percent;
- Currency added 2 percent.
Gross margin was 40.4 percent compared with 41.2 percent a year ago. The decrease in gross margin percentage was primarily due to cost inflation and higher plant costs, partially offset by productivity improvements.
Marketing and selling expenses decreased to $243 million compared with $252 million in the prior year, primarily due to lower advertising and consumer promotion expenses, and lower selling expenses, partially offset by the impact of currency.
Administrative expenses decreased $8 million to $148 million, primarily due to lower incentive compensation costs.
EBIT was $307 million compared with $292 million in the prior-year quarter. Excluding items impacting comparability, adjusted EBIT in the prior-year quarter was $304 million. Adjusted EBIT increased 1 percent primarily due to lower selling and marketing expenses, lower administrative expenses and the favorable impact of currency, partially offset by the decline in gross margin percentage and lower sales volumes.
Net earnings per share were $0.57 in the current quarter compared with adjusted net earnings per share of $0.54 in the prior-year quarter, an increase of 6 percent. EPS benefited from lower weighted average diluted shares outstanding.
Net earnings for the first nine months were $705 million, or $2.11 per share, compared with $731 million, or $2.09 per share, in the year-ago period. Excluding items impacting comparability, net earnings declined 6 percent compared to adjusted net earnings of $749 million, and net earnings per share declined 1 percent versus an adjusted $2.14 per share in the prior year.