High-quality foods and simple meals manufacturer,
Campbell Soup Company
) reported fiscal fourth-quarter and full-year 2013 financial
results. Quarterly adjusted earnings per share rose approximately
10.0% year over year to 45 cents and surpassed the Zacks
Consensus Estimate of 42 cents.
Net sales increased over 13.0% to $1,723 million from the
prior-year quarter. However, it came below the Zacks Consensus
Estimate of $1,830 million. During the quarter, acquisitions
contributed 13%, volume and mix added 1%, and price and sales
allowances contributed 1% to net sales. However, these were
partially offset by the negative impact of the 1% for each
increase in promotional spending and currency fluctuation.
Adjusted gross margin of 36.7% declined 230 basis points (bps)
from the prior-year quarter level of 39.0%, mainly due to the
acquisition of Bolthouse Farms, which has a low gross margin
structure. However, in dollar terms, adjusted gross profit rose
7% year over year to $633 million.
In the reported quarter, marketing and selling expenses remained
flat year over year at $191 million. This was primarily due to
reduced advertising and consumer promotion expenses offset by
costs related to Bolthouse Farms acquisition.
Adjusted operating income also remained flat year over year at
$208 million, mainly due to contribution from acquisitions,
offset by elevated administrative costs. However, adjusted
operating margin contracted 160 basis points to 12.1% from 13.7%
reported in the previous-year period.
U.S. Simple Meals:
Fourth-quarter sales at this division increased 7% year over year
to $493 million. This was mainly due to a 5% rise in volume and
mix, acquisition of Plum Organics that led to an improvement of
3% and 2% in price and sales allowances, respectively. However,
this was partially offset by the negative impact of a 3% rise in
Sales of U.S. Soup grew 4% as sales of ready-to-serve soups
grew 9% and sales of broth surged 13%, while condensed soups'
sales remained flat. Sales of U.S. Sauces increased 12% from the
BOULDER BRANDS (BDBD): Free Stock Analysis
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During the quarter, operating income grew 6% year over year to
$110 million, primarily driven by increased volumes and
productivity enhancements, partially offset by higher promotional
spending and administrative expenses.
Sales at this division dipped 4% year over year to $173 million
due to a 4% decline in volume and mix, and 1% fall in price and
sales allowances, partly offset by decline of 1% in promotional
spending. Sales declines in "V8" and V8 V-Fusion" juices and
juice beverages, and "V8 Splash" juice led to the fall.
The segment's operating income in the quarter declined 20.0% year
over year to $20 million primarily due to cost inflation, partly
offset by productivity enhancements.
Global Baking and Snacking:
This segment's sales increased 3% to $570 million. The results
primarily gained from a 4% rise in volume and mix, and 3%
increase in price and sales allowances, offset a negative impact
of 2% from unfavorable currency exchange rates and 2% from higher
Segment operating income inched up 1% year over year at $84
million, as benefits from increased sales were partly offset by
higher administrative costs and lower gross margin.
International Simple Meals and Beverages:
Sales of this segment fell 7% to $187 million, primarily due to a
4% decrease in volume and mix, 2% negative impact of currency
translation and 1% fall in price and sales allowances.
Region-wise, lower sales in Latin America and Asia-Pacific were
partially offset by higher sales in Canada.
The segment's operating income of $14 million was down 22.2% from
the year-ago period mainly due to reduced earnings from the Asia
Pacific region and Mexico.
Bolthouse and Foodservice:
This segment comprises Bolthouse Farms business, which was
acquired on Aug 6, 2012, and the North America Foodservice
business. This division's quarterly sales were $300 million.
During the quarter, Bolthouse contributed $185 million to segment
sales, while sales at North America Foodservices declined 5% year
over year. The decline in North American Foodservice was due to
lower frozen soup sales due to the loss of a primary restaurant
Operating income rose by $15 million to $25 million, mainly due
to the purchase of Bolthouse Farms, offset by reduced earnings in
North America Foodservice.
Fiscal 2013 in Brief
For fiscal 2013, Campbell soup reported adjusted earnings per
share of $2.64, an 8.0% increase year over year. Moreover, it
surpassed the Zacks Consensus Estimate of $2.61.
Net sales increased over 12.2% to $8,052 million from the past
year. However, it came below the Zacks Consensus Estimate of
$8,597 million. During the year, acquisitions contributed 11%,
volume and mix 1%, and price and sales allowances contributed 2%
to net sales. However, these were partially offset by the
negative impact of the 1% increase in promotional spending.
For fiscal 2014, Campbell Soup expects sales from continuing
operations to augment by 5-6%. Adjusted operating income is
anticipated to rise by 5-7% and adjusted earnings per share to
increase 3-5%. The company anticipates acquisitions to add
nearly $300 million to sales growth, 1% to operating income
growth and about 2 cents to earnings per share.
Pertaining to the new business model in Mexico, reported sales
and costs of product sold will be lowered by nearly $40 million.
Currently, Campbell Soup carries a Zacks Rank #3 (Hold). Other
stocks performing well in the food space include
Boulder Brands, Inc.
Kraft Foods Group, Inc.
Dole Food Company Inc.
). All these carry a Zacks Rank #2 (Buy).