Campbell Soup Company
CEO : Mr. Mark A. Clouse
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 12.5% YoY | 18.7% | 11.4% | 2023-03-08 |
Mark Clouse says,
few key takeaways from the CPB Q2 2023 earnings call:
Net Sales and Earnings
- Organic net sales increased by 13% due to favorable inflation-driven net price realization and strong consumer demand for brands.
- Adjusted EBIT increased by 14%, driven primarily by top-line growth and modest gross profit expansion.
- Adjusted earnings per share were $0.80, up 16%.
Meals and Beverages Division
- Organic net sales increased by 11%.
- US soup business grew dollar consumption by 4% in Q2 despite increasing promotional pressure from private label.
- The brand held or grew share in its segments for a total share gain of 0.3 points in Pacific Foods.
Snacks Division
- The division had a strong top-line growth of 15% driven by favorable net price realization, volume gains and continued growth of power brands.
- Goldfish had a 21% consumption growth and share gains of 0.7 points.
- We are number one in both the cookie cracker and salty snack categories in terms of share growth in the second quarter.
Guidance
- The company raised its net sales guidance and raised the midpoint of the adjusted EBIT and adjusted EPS guidance for the 2023 fiscal year.
- Despite some additional pressure from lower pension income, the company has greater confidence in its profit and earnings due to strong business fundamentals and continued health of brands.
Inflation and Competition
- The company has managed to mitigate inflation by using a variety of levers, such as targeted pricing, cost savings initiatives, and productivity improvements.
- The team remains highly vigilant of price gaps on key brands and closely monitors elasticities.
- The company is taking appropriate and pragmatic actions to continue to remain competitive and drive sustained profitable growth.
Mick Beekhuizen says,
Q2 Fiscal 2023 Results
- Net sales, adjusted EBIT, and adjusted EPS increased double-digits versus prior year
- Second quarter organic net sales increased by 13%
- Net price realization was favorable, partially offset by a slight volume and mix headwind
- Adjusted EBIT margin increased by 20 basis points to 14.6%
- Adjusted EPS increased by $0.11 or 16%
Adjusted Gross Profit Margin
- Adjusted gross profit margin increased by 30 basis points from 30.4% last year to 30.7% this year
- Favorable net price realization drove a 1,020 basis point benefit, partially offset by inflation and other supply chain costs
- Supply chain productivity program drove a 280 basis point benefit to adjusted gross profit margin
- Unfavorable volume mix had a negative impact of 130 basis points
Initiatives to Mitigate Inflation
- Core inflation was approximately 14% in the second quarter
- Actions include targeted pricing and trade optimization
- Net pricing was 14%, reflecting the impact of Wave 2 and 3 pricing
- For the second half of the fiscal year, the vast majority of raw materials are covered
Segments
- In Meals & Beverages, reported net sales growth of 10%
- In Snacks, net sales increased 15%, driven by sales of power brands
- Segment operating margin increased by 100 basis points in Meals & Beverages and 90 basis points in Snacks
Cash Flow and Liquidity
- Cash flow from operations was $732 million through the first half
- Full year capital expenditures are forecasted to be $325 million for fiscal 2023
- Year-to-date cash outflows from financing activities were $525 million, including dividends paid and share repurchases
Full Year Guidance
- Organic net sales growth is expected to be in the range of 6% to 7%
- Adjusted EBIT is expected to be in the range of $1.015 billion to $1.035 billion
- Adjusted EPS is expected to be in the range of $3.05 to $3.11
- Capital expenditures are expected to be approximately $325 million
Q & A sessions,
Expected Strong Q2 Results
- Productivity savings exceeded expectations
- Supply chain improvements continue
- Investments in promotions and marketing more efficient than anticipated
Strategic Approach to Soup
- Focus on winning key battles in specific categories
- Drive long-term relevance of category through versatility and value
- Balance support for different parts of soup portfolio
Pivotal Moment in Snacking Strategy
- Delivered strong top-line growth
- Partner brands performing better
- Fastest-growing share player in cookie cracker and salty categories
- Broad-based growth across the portfolio
93% of Total Costs Covered
- Provides clarity and precision in managing the balance of the year
Pension Income Headwind
- Incremental pension income headwind of $45 million for the full year
- Represents $0.12 of EPS and about 50bps of margin
No bad stock 