Campbell Soup (CPB) Beats Q4 Earnings, Issues FY16 View

Campbell Soup Company CPB reported better-than-expected bottom-line results in fourth-quarter fiscal 2015. Adjusted earnings from continuing operations of 43 cents per share came a penny ahead of the Zacks Consensus Estimate and rose 5% from the prior-year quarter.

Campbell Soup Company - Quarterly EPS | FindTheBest

However, net sales fell nearly 9% to $1,693 million from $1,852 million in the prior-year quarter and missed the Zacks Consensus Estimate of $1,709 million, mainly due to negative impact of foreign currency translations and one less week compared with the year-ago quarter.

Organic sales rose 1% due to reduced promotional spending and higher selling prices, offset by lower volumes.

Adjusted gross margin of 36.1% expanded 180 basis points (bps) from the prior-year quarter level, mainly due to productivity enhancements, lower promotional expenditure and increased selling prices, offset by input cost inflation.

Adjusted earnings before interest and tax (EBIT) jumped 5% year over year to $234 million mainly due to higher adjusted gross margin, partly offset by negative foreign currency impact and higher administrative expenses.

Segment Analysis

U.S. Simple Meals: In the fourth quarter, sales at the division fell 3% year over year to $505 million, while organic sales rose 4%, mainly owing to higher volume and mix coupled with increase in price and sales allowances. During the quarter, sales for U.S. soup declined 2%, Campbell’s condensed soups fell 4% and ready-to-serve soups dipped 3%, whereas broth sales grew 11%. Other simple meals also gained in the quarter mainly from increased sales of Prego pasta sauces.

Operating income rose 4% year over year to $118 million, primarily because of organic sales increases and lower selling expenses, offset by impact of one less week.

U.S. Beverages: Sales at the division dipped 10% year over year to $165 million. Organic sales for the segment fell 4% as sales gains in V8 vegetable juices were more than offset by a decline in V8 V-Fusion beverages.

The segment’s operating income reduced 23% to $33 million from the year-ago period, primarily because of one less week in the quarter that weighed on sales.

Global Baking and Snacking: The segment’s sales were down 12% to $553 million. On an organic basis, segment sales grew 1% on the back of improvements in Pepperidge Farm and Arnott’s, offset by decline in Kelsen.

Operating income fell 26% year over year to $73 million, primarily on the back of negative currency impact, the effect of one less week, higher administrative and marketing expenses, and impairment charges related to trademarks, offset by higher gross margins.

International Simple Meals and Beverages: Sales of this segment declined 24% to $142 million, while on a currency adjusted basis it fell 5%. The decline was mainly due to lower sales in Canada and Australia.

The segment’s operating income decelerated 48% to $11 million on account of lower volumes, including the impact of one less week, as well as negative currency translation effects.

Bolthouse and Foodservice: This segment consists of Bolthouse Farms and the North America Foodservice businesses. This division's quarterly sales were $328 million, down 2% from the comparable year-ago quarter. Organic sales jumped 4% on the back of increased volumes in Bolthouse Farms refrigerated beverages and salad dressings and in North America Foodservice, offset by declines resulting from volumes lost in Bolthouse Farms carrots.

Further, the company’s operating income fell 3% year over year to $28 million.

Fiscal 2016 Outlook

The company issued its guidance for fiscal, which is in line with its long-term targets. The company anticipates sales growth in the 0–1% range. The sales guidance for the fiscal year reflects a 2 percentage point negative impact from foreign currency translations.

Further, adjusted EBIT is projected to increase in the range of 3% to 5%. Adjusted earnings for fiscal 2016 are expected to be in the range of $2.53–$2.58, reflecting growth of 3% to 5% from $2.46 reported in fiscal 2015.

Currently, Campbell Soup carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other favorably ranked stocks in the same industry include Omega Protein Corporation OME with a Zacks Rank #1 (Strong Buy), The J. M. Smucker Company SJM and Flowers Foods Inc. FLO, both carrying a Zacks Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CAMPBELL SOUP (CPB): Free Stock Analysis Report
 
SMUCKER JM (SJM): Free Stock Analysis Report
 
FLOWERS FOODS (FLO): Free Stock Analysis Report
 
OMEGA PROTEIN (OME): Free Stock Analysis Report
 
To read this article on Zacks.com click here.