CAMDEN, N.J.--(BUSINESS WIRE)--Campbell Soup Company (NYSE:CPB) President and Chief Executive Officer Denise Morrison and other senior leaders will meet with investors today to provide an update on key business strategies and outline important actions the company is taking to improve its financial performance.
In her presentation, Morrison will discuss Campbell’s key strategic imperatives, including plans to be more transparent about how its foods and drinks are made to build greater consumer trust; and to increase the company’s focus on faster-growing categories and regions, such as health and well-being, packaged fresh and developing markets. Management will also provide an update on its ongoing enterprise redesign and cost savings initiatives.
Campbell executives will outline plans for the company’s three new divisions, each with a clear portfolio role:
- Americas Simple Meals and Beverages, the largest division and the company’s economic engine, will be managed for moderate growth and margin expansion and is focused on responding to consumer shifts with changes in its core portfolio and a more focused approach to innovation.
- Global Biscuits and Snacks, which unifies the Pepperidge Farm, Arnott’s and Kelsen businesses into a fully integrated biscuits and snacks portfolio, is focused on strengthening its core markets and expanding in developing markets.
- Campbell Fresh, which now combines recently-acquired Garden Fresh Gourmet with the Bolthouse Farms portfolio and Campbell’s retail refrigerated soups, is focused on building scale and accelerating growth in rapidly expanding packaged fresh categories as the company strengthens its health and well-being platform.
The company announced that it will change its reporting segments beginning in the first-quarter of fiscal 2016 to reflect its new divisional structure.
Cost Reduction Initiatives
Campbell will provide additional details on its previously announced enterprise redesign and cost reduction initiatives.
Campbell is achieving savings earlier than anticipated based on reductions in headcount, travel, consulting and non-working marketing. The company now expects approximately $75 million in savings from these cost reduction initiatives in fiscal 2015. As a result, the company is increasing its annual savings target from $200 million to $250 million, which it expects to achieve by the close of fiscal 2018. As previously disclosed, the company expects costs of $250-$325 million related to these initiatives through fiscal 2018.
Revises Fiscal 2015 Guidance for Continuing Operations
Campbell revised its previous full-year guidance for fiscal 2015, which ends Aug. 2, 2015.
Consistent with previous sales guidance, the company expects sales to decline by 1 percent, reflecting the negative impact of currency translation. Reflecting favorable gross margin performance and earlier-than-expected benefits from the previously announced cost reduction initiatives, Campbell now expects adjusted EBIT to decline -2 to -1 percent, compared to the previous guidance of being at the favorable end of the -7 to -5 percent range. The company expects adjusted EPS to be in the range of -1 to 0 percent, or $2.43 to $2.46 per share, compared to the previous guidance of being at the favorable end of the -5 to -3 percent range or $2.32 to $2.38 per share.
This guidance is calculated on an adjusted base, which excludes the impact of a 53rd week in fiscal 2014 and includes an estimated 2-point negative impact from currency translation across sales, EBIT and EPS in fiscal 2015.
A detailed reconciliation of adjusted financial information to the reported information is included at the end of this news release.
Revised Long-Term Growth Targets
Campbell is revising its long-term targets to reflect the current conditions in the food industry. The company’s new long-term target for organic sales growth is 1 to 3 percent, compared to the previous target of 3 to 4 percent. Long-term earnings growth targets, which now exclude currency translation, remain unchanged with adjusted EBIT growing 4 to 6 percent and adjusted EPS growing 5 to 7 percent.
Campbell plans to provide fiscal 2016 guidance for net sales, adjusted EBIT and adjusted EPS when it reports fourth-quarter fiscal 2015 results Sept. 3, 2015.
A webcast of the meeting will be available at investor.campbellsoupcompany.com beginning at 12:30 p.m. Eastern Daylight Time today. A replay and transcript will be available after the event.
About Campbell Soup Company
Campbell (NYSE:CPB) is driven and inspired by our Purpose, “Real food that matters for life’s moments.” The company makes a range of high-quality soups and simple meals, beverages, snacks and packaged fresh foods. For generations, people have trusted Campbell to provide authentic, flavorful and readily available foods and beverages that connect them to each other, to warm memories, and to what’s important today. Led by its iconic Campbell’s brand, the company’s portfolio includes Pepperidge Farm, Bolthouse Farms, Arnott’s, V8, Swanson, Pace, Prego, Plum, Royal Dansk, Kjeldsens and Garden Fresh Gourmet. Founded in 1869, Campbell has a heritage of giving back and acting as a good steward of the planet’s natural resources. The company is a member of the Standard & Poor’s 500 and the Dow Jones Sustainability Indexes. For more information, visit www.campbellsoupcompany.com or follow company news on Twitter via @CampbellSoupCo.
This release contains “forward-looking statements.” Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “believes,” “estimates,” “expects” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make on guidance for 2015, on our long-term growth rates, on our cost-saving initiatives, and on our new enterprise and management structure. Forward-looking statements are based on our current expectations and assumptions regarding our business, our industry and other future conditions. Forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements due to factors such as our ability to manage organizational change effectively; our ability to realize projected benefits and cost savings from the new structure and our cost-savings initiatives; the impact of strong competitive responses to our marketing strategies; risks associated with trade and consumer acceptance of our new and improved products; the effectiveness of our promotional programs; the impact of portfolio changes, and the other factors described in “Risk Factors” in the company’s most recent Form 10-K and in subsequent SEC filings. We undertake no obligation to update these statements to reflect new information or future events.
Reconciliation of GAAP and Non-GAAP Financial Measures Fiscal Year Ended August 3, 2014
Campbell Soup Company uses certain non-GAAP financial measures as defined by the Securities and Exchange Commission in certain communications. These non-GAAP financial measures are measures of performance not defined by accounting principles generally accepted in the United States and should be considered in addition to, not in lieu of, GAAP reported measures.
The company believes that financial information excluding certain transactions not considered to be part of the ongoing business improves the comparability of year-to-year results. The following tables reconcile financial information, presented in accordance with GAAP, to financial information excluding certain items. Fiscal 2014 included 53 weeks. Consequently, the company believes that investors may be able to better understand its fiscal 2015 performance excluding certain transactions and the estimated impact of the 53rd week. In establishing guidance for fiscal 2015, the adjusted fiscal 2014 results are revised to exclude the estimated impact of the 53rd week below:
|Year Ended August 3, 2014|
|(millions, except per share amounts)||Net Sales||EBIT||
Earnings from Continuing
Diluted Earnings Per Share -
|2014, As reported||$||8,268||$||1,192||$||737||$||2.33|
|Add: Restructuring charges and related costs (1)||-||58||36||0.11|
|Add: Pension settlement charges (2)||-||22||14||0.04|
|Add: Loss on foreign exchange forward contracts (3)||-||9||6||0.02|
|Add: Tax expense associated with sale of European business (3)||-||-||7||0.02|
|Deduct: Impact of 53rd week||(129||)||(37||)||(25||)||(0.08||)|
|Adjusted 2014 Base||$||8,139||$||1,244||$||775||$||2.45|
*The sum of the individual per share amounts may not add due to rounding.
(1) In fiscal 2014, the company implemented initiatives to streamline its salaried workforce in North America and its workforce in the Asia Pacific region; restructure manufacturing and streamline operations for its soup and broth business in China; improve supply chain efficiency in Australia; and reduce overhead across the organization. In fiscal 2014, the company recorded pre-tax restructuring charges of $54 million ($33 million after tax, or $.10 per share, in earnings from continuing operations attributable to Campbell Soup Company) associated with the 2014 initiatives. In fiscal 2013, the company implemented initiatives to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network; expand access to manufacturing and distribution capabilities in Mexico; improve its Pepperidge Farm bakery supply chain cost structure; and reduce overhead in North America. In fiscal 2014, the company recorded pre-tax restructuring charges of $1 million and restructuring-related costs of $3 million in Cost of products sold (aggregate impact of $3 million after tax or $.01 per share on earnings from continuing operations) associated with the 2013 initiatives.
(2) In fiscal 2014, the company recognized pension settlement charges associated with a U.S. pension plan. The settlements resulted from the level of lump sum distributions from the plan’s assets in 2014, primarily due to the closure of the facility in Sacramento, California. In fiscal 2014, the company recognized pre-tax pension settlement charges of $22 million ($14 million after tax, or $.04 per share, in earnings from continuing operations).
(3) On October 28, 2013, the company completed the sale of its simple meals business in Europe. The results of the business were reported as discontinued operations. In fiscal 2014, the company recorded a loss of $9 million ($6 million after tax, or $.02 per share) on foreign exchange forward contracts used to hedge the proceeds from the sale of the European simple meals business. The loss was included in earnings from continuing operations. In addition, the company recorded tax expense of $7 million ($.02 per share) in earnings from continuing operations associated with the sale.