Campbell Soup Earnings Call NUGGETS: Organic Revenue Growth, 2013 Growth Rate
Organic Revenue Growth
David Driscoll – Citigroup: I wanted to ask a little bit about the organic revenue growth within your F ‘13 guidance. So, I believe that Bolthouse, Craig, I think you said that it will add 10 points of revenue growth such that organic revenue would be just 0% to 2% within your guidance range?
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B. Craig Owens – SVP, CFO and CAO: That’s correct.
David Driscoll – Citigroup: Given that Campbell’s is accelerating the new product introductions with, I think you actually went from 47 to 50 on-the-slide, so you are now showing 50 new products planned for F ‘13 and that Campbell’s will realize price increases in F ‘13 partially because of the inflationary pressures, why is organic revenue growth so low. Why isn’t it going to be something a lot better than 0% to 2%?
B. Craig Owens – SVP, CFO and CAO: David I think we continue to see some headwinds from the consumer environment. As we’ve also said we’re going to lower our advertising spend in the U.S. Soup business while we think that has good payback to it. It will have a negative impact on our sales number and U.S. Soup for the year and I would point out that we are anticipating an improvement versus our prior year organic sales with all of that.
David Driscoll – Citigroup: Maybe just one follow-up on that. Can you quantify the fourth quarter buy-in on condensed soup I believe there’s a 5% price increase in the fourth quarter for condensed and that the retailers bought in ahead of that hence the significant growth in condensed. I assume that, that negatively hits volumes in 1Q ’13, but can you give us some quantification of what the magnitude you expect to happen in the first quarter?
B. Craig Owens – SVP, CFO and CAO: It’s very difficult to precisely quantify. I think though one thing that’s important, it’s not so much the impact of the buying prior to price increase as it is that we had pretty significant consumer promotion activity going on at the end of the quarter, which caused some increase in inventories in store. We expect to see that sell through, but you’re right, there could be a little bit of overhang into Q1.
Denise Morrison – President and CEO: Then what we saw was a normal situation around our pricing increase and actually coming into our F ‘13, a reasonable inventory level.
David Driscoll – Citigroup: Okay. I appreciate the comments and we’ll look forward to see what happens in soup season thank you.
Denise Morrison – President and CEO: Thank you.
2013 Growth Rate
Thilo Wrede – Jefferies: Denise, excluding Bolthouse you’ve grown or you intend to grow EPS this year by 1% to 2%, which is obviously quite a bit away from the 5% to 7% long-term target. How quickly do you think can you get to that long-term target and what needs to have for you to get there?
Denise Morrison – President and CEO: We recognize said that the EPS will represent an improvement in trend on the base business, but won’t get us all the way there. We’re not really disclosing a timeframe that we will get there, but we’re just giving guidance for the entire business inclusive of Bolthouse Farms.
Thilo Wrede – Jefferies: Then maybe I’ll ask differently. At the Analyst Day and today again you have reiterated that the growth rate that you’re looking at for 2013 isn’t quite what you had expected last year. How much worse is the growth rate for this year than what you expected when you put out your strategic plan last year?
Jennifer Driscoll – VP, IR: I think when we talked about return to our long-term targets, which is 3% to 4% sales, 4% to 5% EBIT, and 5% to 7%…
Denise Morrison – President and CEO: Right, and I think the delivery this year was in line with the guidance that we give in July 2011.