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Campbell's Profits Fall 13 Percent

CAMDEN, N.J. (AP) — First-quarter earnings at Campbell Soup Co. fell 13 percent due to increased marketing spending on its U.S. soup business and Pepperidge Farm snack foods.

For the three months ended Oct. 29, Campbell reported net income of $204 million, or 47 cents per share, compared with $235 million, or 54 cents per share, for the same period a year ago, the company said Wednesday.

The results exceeded Wall Street's lowered expectations of 45 cents per share, according to analysts surveyed by First Call/Thomson Financial. Camden-based Campbell had issued a profit warning in September, saying that first quarter earnings would be 6 cents to 8 cents per share below estimates at the time.

Operating earnings were down 18 percent for the company's biscuits and confectionary division and down 9 percent for the soups and sauces division.

Net sales for the quarter increased to $1.78 billion from $1.77 billion in the year-ago period.

``They're pursuing the right strategies, but the soup category's been so tough lately,'' said Romitha Mally, a packaged-foods analyst at Goldman Sachs & Co. ``I think it's still too early to say'' whether Campbell's latest turnaround plan will work.

Mally said Campbell's new product launches and 14 percent increase in its soup advertising budget over last year's first quarter were both positive moves. She said it's too soon to tell whether those efforts will revitalize the company but noted that after five quarters of lagging super consumption, the latest quarter shows improvement.

First-quarter global soup volume was up 4 percent. Soup consumption in the United States, where Campbell has 70 percent of the wet soup market, rose 3 percent, said David W. Johnson, president and chief executive officer.

``The real key here is how sustainable are these consumption trends,'' Mally said.

She noted that sales of ready-to-serve soups in general have been growing, while sales have been declining for Campbell's condensed soups, which bring in 60 percent of the company's total U.S. soup revenues.

Sales of Campbell's beverages, particularly V8 Splash, were down, but the Godiva Chocolatier and Pepperidge Farm brands both had strong sales growth.

The company said it expects earnings per share for its 2001 fiscal year to be flat compared with the previous year.

Campbell's other brands include Franco-American and Prego pasta sauces. Newly introduced products include Giant Goldfish and Goldfish Grahams crackers and Spritzers cookies.

Shares of Campbell were up 67 cents to close at $30.48 a share Wednesday on the New York Stock Exchange.


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