Volume down, Campbell baking earnings slip

by Josh Sosland
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CAMDEN, N.J. — Operating income of the Global Baking and Snacking business of Campbell Soup Co. was $71 million in the three months ended Jan. 29, down 12% from $81 million in the second quarter of fiscal 2011. Net sales were $526 million, unchanged. Campbell attributed the dip in operating profits primarily to cost inflation and stepped-up promotional spending with higher selling prices as a partial offset. The flat quarter sales featured double-digit gains in the company’s Goldfish brand snack crackers with a decline in cookies and a “slight” decline in bakery products. Further breaking down the sales trends, Campbell said volume and mix added 4% to sales, price and sales allowances added 5%, increased promotional spending subtracted 2% and currency added 1%. Denise Morrison, president and chief executive officer, emphasized the importance of brand building in the current year. “Across our portfolio, we increased marketing spending this quarter, consistent with our plan to shift our emphasis to longer-term brand-building activities,” she said. “Advertising and consumer promotion expense rose 6% as we invested in key brands.” Campbell Soup net income in the second quarter was $205 million, equal to 64c per share on the common stock, down 14% from $239 million, or $72 million in the second quarter last year. Results in the current year included restructuring expenses totaling $3 million. Net sales were $2,112 million, down 1%.

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