CAMDEN, N.J.--(BUSINESS WIRE)--Campbell Soup Company today reported its third-quarter results for fiscal 2016.
Third-Quarter Results
Sales decreased 2 percent to $1.870 billion driven by a decline in organic sales and the adverse impact of currency translation, partly offset by the benefit from the acquisition of Garden Fresh Gourmet. Organic sales decreased 2 percent driven by lower volume and higher promotional spending, partly offset by higher selling prices.
Gross margin decreased from 35.9 percent to 35.3 percent. Excluding items impacting comparability, adjusted gross margin increased 0.4 points. The increase in adjusted gross margin was primarily driven by productivity improvements and higher selling prices, partially offset by higher supply chain costs and inflation, as well as higher promotional spending. The increase in supply chain costs was primarily driven by higher carrot costs in the quarter due to the adverse impact of weather conditions on crop yields.
Marketing and selling expenses increased 7 percent to $228 million. Excluding items impacting comparability, adjusted marketing and selling expenses increased 5 percent to $219 million primarily due to higher advertising and consumer promotion expenses. Administrative expenses increased 8 percent to $154 million. Excluding items impacting comparability, adjusted administrative expenses increased 4 percent to $132 million primarily due to higher incentive compensation costs, as well as inflation, an increase in costs to support long-term innovation and the acquisition of Garden Fresh Gourmet, partly offset by the benefits from cost savings initiatives.
EBIT decreased 6 percent to $268 million. Excluding items impacting comparability, adjusted EBIT decreased 5 percent to $312 million reflecting higher advertising and consumer promotion expenses, higher administrative expenses and lower volumes, partly offset by a higher gross margin percentage.
Net interest expense of $28 million was comparable to the prior year. The tax rate decreased 7.5 percentage points to 22.9 percent. Excluding items impacting comparability, the adjusted tax rate decreased 3.1 percentage points to 28.5 percent primarily due to lower taxes on foreign earnings, partly offset by the geographic mix of earnings.
Nine-Month Results
Sales decreased 2 percent to $6.274 billion driven by the adverse impact of currency translation and a decline in organic sales, partly offset by the benefit from the acquisition of Garden Fresh Gourmet. Organic sales decreased 1 percent driven by lower volume, partly offset by higher selling prices.
EBIT decreased 1 percent to $997 million. Excluding items impacting comparability, adjusted EBIT increased 15 percent to $1.214 billion reflecting a higher adjusted gross margin percentage and the benefits from cost savings initiatives, partly offset by higher incentive compensation costs, the adverse impact of currency translation and volume declines.
Net interest expense increased $5 million to $83 million reflecting higher average interest rates on the debt portfolio. The tax rate decreased 0.9 percentage points to 29.5 percent. Excluding items impacting comparability, the adjusted tax rate increased 1.0 percentage point to 31.8 percent. This increase was primarily due to the geographic mix of earnings, and lapping the favorable resolution of an intercompany pricing agreement between the U.S. and Canada in the prior year, partly offset by lower taxes on foreign earnings.
Cash flow from operations increased to $1.183 billion from $971 million a year ago primarily due to higher cash earnings and lower working capital requirements. Full report.
