The Campbell Soup Company has posted a sharp fall in net earnings for the fourth quarter from US$96m, or $0.23 a share, to $44m, or $0.11 a share, hit by costs associated with selling businesses in the UK and Ireland. Net earnings for the full year rose to $766m, from $707m last year.
The US-based food group also warned that earnings for the current fiscal year would be below analysts’ forecasts.
Sales from continuing operations for the fourth quarter rose by 4% to $1.45bn. Revenues for the fiscal 2006 year also rose by 4% to $7.34bn.
“We are very pleased with our performance in the fourth quarter,” said president and CEO Douglas R Conant. “We exceeded our expectations for earnings while we also significantly increased spending on advertising in our US businesses. In addition, we achieved successful distribution of our new lower sodium soups in the US.
“For the year, our overall results were outstanding, consistent with our commitment to deliver quality growth. Our top-line growth from continuing operations of 4% was at the upper end of our target range, and our earnings per share growth of 12%, on an adjusted basis, was well above our target. We continue to position our business for sustainable sales and earnings growth.”
Sales from US soup, sauces and beverages rose by 7% for the quarter to $556m, while revenues from baking and snacking were flat at $438m. International soups and sauces revenues rose by 6% to $200m.
Operating earnings for the fourth quarter from US soups, sauces and beverages rose by 10% to $114m, driven by higher selling prices and productivity improvements, which more than offset cost inflation and increased advertising expenses. However, baking and snacking operating profits fell by 10% to $62m. Operating profits from the international soups and sauces division fell by 71% to $5m.
For the full year, sales from US soups, sauces and beverages rose by 5% to $3.26bn, while baking and snacking revenues were unchanged at $1.75bn. International soups and sauces sales rose by 2% to $1.26bn.
Operating profits from US soups, sauces and beverages rose by 9% to $815m for the full year. The company said the higher operating earnings were driven by higher selling prices and productivity gains, which were partially offset by cost inflation and higher advertising spending.
Operating profits for the year from baking and snacking fell by 6% to $187m. International soups and sauces operating profits rose by 1% to $144m. Campbell said full-year operating earnings from the international soups and sauces division were driven by gains in Canada, which delivered strong sales performance, partially offset by expenses in Europe associated with improving the cost structure of the supply chain and an organisational realignment due to the UK and Irish disposals.