Campbell's posts poor UK sales
six per cent, bolstered by strong US demand as European soup sales
slip.
For the third quarter ending 30 April 2006, Campbell's net sales rose to $1.83bn (€1.42bn) from last year's $1.73bn. This was supported by a 14 per cent rise in US soup, sauce and beverage sales, to $713m.
Net earnings increased to $166m in the third quarter, from $146 million in the prior year.
US operations were lifted by higher volume and selling prices and productivity improvements aimed at offsetting the rising marketing spend. Operating income rose 12.5 per cent to $171m, up from last year's $152m.
Condensed soup sales in America were up 11 per cent, ready-to-serve soup sales up 17 per cent, and broth sales up 30 per cent.
CEO Douglas Conant said in a statement: "US soup business was exceptionally strong on both the top and bottom line. Our strategy to direct our marketing spending toward better communicating the quality, convenience and value of our soups and away from heavy promotional activity worked very well for the quarter and year to date."
But international Soup and Sauces saw a one per cent sales decline for the third-quarter, to $430m.
In particular, European sales were disappointing - declining eight per cent in the quarter. Falling UK and French sales worked to offset gains in Germany and Belgium.
Sales for the Baking and Snacking division were $422m, up only 0.2 per cent on last year's $421m. The stagnant performance was attributed to an organisational realignment in Australia and lower biscuit sales in Indonesia.
Operating income for the division, which makes Arnott's biscuits, fell 2.8 per cent to $35m, compared to $36m last year.
However the US-based Pepperidge Farm division saw sales grow 11 per cent within all three sections of its business - bakery, cookies and crackers, and frozen all contributed.
As part of an ongoing effort to consolidate its European production and business portfolio, the food giant announced it would sell sideline brands in the UK and Ireland to concentrate on its more successful and traditional soup lines.
It has now received seven offers for its convenience food portfolio from the likes of Lion Capital, RHM, Premier Foods and Kraft but the successful bidder will not be revealed until July.
Analysts estimate the portfolio, including Batchelor's Cuppa Soup, Oxo, Homepride Sauces and Fray Bentos tinned pies, are worth up to £500m (€733m).
Campbell's says that currently it is capitalising on consumers' preferences for convenience with the introduction of instant dry soups in multi-serving jars in the UK and France, and is also expanding in the wellness category with its V8 brand in the UK, which has now been launched in five different flavours.
The proposed sale of parts of the European business could do much to shake up the company's product portfolio and will also see the company's manufacturing base become more focused.
