Campbell Outlines Key Strategies for Growth
Revises Fiscal 2016 Full-year Sales Guidance and Outlines Factors Impacting Fiscal 2017
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At its annual Investor Meeting, Campbell outlined plans to elevate trust through real food, transparency and sustainability; build its digital and e-commerce capabilities; continue to diversify its portfolio in health and well-being; and expand its presence in developing markets. (Photo: Business Wire)
- Elevate trust through real food, transparency and sustainability;
- Build digital and e-commerce capabilities;
- Continue to diversify Campbell’s portfolio in health and well-being with fresh, organic and healthful foods; and
- Expand Campbell’s presence in developing markets.
Morrison said, “Over the last five years, we've taken a number of bold steps to reposition the company for not just profitable, but sustainable growth. Our progress has been methodical. We’ve improved our company and shifted our center of gravity. But we have higher aspirations for the food we make, the role we play in people’s lives and improving our growth trajectory. That’s why it’s necessary to continue to relentlessly improve ourselves, our food, our business and our culture to further differentiate Campbell and to forge a meaningful and lasting place in the lives of new generations of consumers.”
Defining the Future of Real Food, Elevating Transparency
Campbell outlined how its real food philosophy is changing how it thinks and acts about its food, helping to restore consumers’ connection to food and supporting the company’s goal to set the standard for transparency in the food industry. “We believe real food should be made with recognizable, desirable ingredients from plants or animals. It should be responsibly crafted using ethical sourcing and sustainable practices that safeguard natural resources. Lastly, it should always be delicious, safe and available at a fair price—all three without compromise,” said Morrison.
Campbell also said it will use only antibiotic-free chicken in its products, a shift that will be implemented over the next few years.
Alexander said, “We have defined our real food philosophy and laid out a plan to evolve our portfolio over time. This will not be a straightforward journey, or an easy one, but we are resolutely committed to it.”
Health and Well-being
The company discussed expanding its offerings in the faster-growing health and well-being space with a focus on key growth areas such as packaged fresh innovation and expanding organic and clean label offerings in center store.
Expand Presence in Developing Markets
In
Mignini also outlined efforts in the U.S. to support the momentum of the Goldfish
cracker business by building on the launch of Goldfish Made with
Organic Wheat crackers, and to extend the national roll out of
Increasing Digital
Morrison highlighted how the company has shifted advertising spend to digital and mobile platforms. In fiscal 2016, nearly 40 percent of Campbell’s advertising dollars were spent on digital compared to 19 percent in fiscal 2015.
Financial Update
Senior Vice President and Chief Financial Officer
Revised Fiscal 2016 Sales Guidance
Campbell lowered its outlook for net sales while maintaining its
previous guidance ranges for adjusted Earnings Before Interest and Taxes
(EBIT) and adjusted Earnings Per Share (EPS). Campbell now expects net
sales to decline by -2 percent to -1 percent compared to the previous
range of -1 percent to 0 percent. The revised net sales guidance
reflects the impact of the recent recall of
The company continues to expect adjusted EBIT to grow 11 to 13 percent
and adjusted EPS to grow 11 to 13 percent, or
A reconciliation of the adjusted 2015 financial information to the reported information is included at the end of this news release.
Cost Savings Initiatives and Cash Flow
Campbell continues to expect its current cost savings initiatives to
deliver
Key Drivers for Fiscal 2017
Looking ahead to fiscal 2017, with cost savings and productivity gains
exceeding inflation, Campbell expects its adjusted gross margin
percentage to increase slightly. While inflation in core ingredient and
packaging inputs has moderated, the company is forecasting a total cost
of products sold (COPS) inflation of approximately 2 percent including
higher wage and benefit costs and the adverse impact of a stronger
dollar on the input costs of its international businesses. Campbell will
continue to target supply chain productivity gains equal to 3 percent of
COPS. Under its cost savings initiatives, Campbell expects to deliver
incremental savings of approximately
Campbell plans to provide fiscal 2017 guidance when it reports
fourth-quarter and full-year fiscal 2016 results on
Long-Term Growth Targets
Campbell reiterated its long-term targets for organic sales and earnings. The company is targeting long-term organic sales growth of 1 to 3 percent. Excluding currency translation, the company is targeting adjusted EBIT growth of 4 to 6 percent and adjusted EPS growth of 5 to 7 percent.
A replay of the presentations, along with accompanying slides, will be available at investor.campbellsoupcompany.com after the completion of the event.
About
Campbell (NYSE:CPB) is driven and inspired by our Purpose: “Real food
that matters for life’s moments.” We make 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 our
iconic Campbell’s brand, our portfolio includes
Forward-Looking Statements
This release contains “forward-looking statements” that reflect the
company’s current expectations about the impact of its future plans and
performance on the company’s business or financial results. These
forward-looking statements, including statements made regarding product
and marketing strategies, fiscal 2016 guidance, fiscal 2017 key drivers,
and the company’s long-term growth targets, rely on a number of
assumptions and estimates that could be inaccurate and which are subject
to risks and uncertainties. The factors that could cause the company’s
actual results to vary materially from those anticipated or expressed in
any forward-looking statement include (1) the company’s ability to
manage changes to its organizational structure and/or business
processes; (2) the company’s ability to realize projected cost savings
and benefits from its efficiency programs; (3) the impact of strong
competitive responses to the company’s efforts to leverage its brand
power in the market; (4) the impact of changes in consumer demand for
the company’s products; (5) the risks associated with trade and consumer
acceptance of the company’s initiatives, including its trade and
promotional programs; (6) the practices, including changes to inventory
practices, and increased significance of certain of the company’s key
trade customers; (7) the impact of fluctuations in the supply or costs
of energy and raw and packaging materials; (8) the impact of business
portfolio changes; (9) the uncertainties of litigation and regulatory
actions against the company; (10) the impact of changes in currency
exchange rates, tax rates, interest rates, debt and equity markets,
inflation rates, economic conditions, law, regulation and other external
factors; (11) the impact of unforeseen business disruptions in one or
more of the company’s markets due to political instability, civil
disobedience, terrorism, armed hostilities, natural disasters or other
calamities; and (12) other factors described in the company’s most
recent Form 10-K and subsequent
Reconciliation of GAAP and Non-GAAP Financial Measures Fiscal Year
Ended
The company believes that financial information excluding certain items not considered to be part of the ongoing business improves the comparability of year-to-year results. Consequently, the company believes that investors may be able to better understand its earnings results if these items are excluded from the results. The following tables reconcile financial information, presented in accordance with GAAP, to financial information excluding certain items.
Year Ended August 2, 2015 | ||||||||||||
(millions, except per share amounts) | EBIT |
Net Earnings Attributable to Campbell Soup Company |
Diluted Earnings Per Share - Net Earnings Attributable to Campbell Soup Company* |
|||||||||
2015, As reported | $ | 1,054 | $ | 666 | $ | 2.13 | ||||||
Add: Pension and postretirement benefit mark-to-market adjustments (1) | 138 | 87 | 0.28 | |||||||||
Add: Restructuring charges and implementation costs (2) | 124 | 78 | 0.25 | |||||||||
Adjusted 2015 | $ | 1,316 | $ | 831 | $ | 2.65 | ||||||
*The sum of the individual per share amounts may not add due to rounding.
(1) In fiscal 2016, the company changed the method of accounting for the
recognition of actuarial gains and losses for defined benefit pension
and postretirement plans and the calculation of expected return on
pension plan assets. Historically, actuarial gains and losses associated
with benefit obligations were recognized in Accumulated other
comprehensive loss in the Consolidated Balance Sheets and were amortized
into earnings over the remaining service life of participants to the
extent that the amounts were in excess of a corridor. Under the new
policy, actuarial gains and losses will be recognized immediately in the
Consolidated Statements of Earnings as of the measurement date, which is
typically the end of the fiscal year, or more frequently if an interim
remeasurement is required. In addition, the company will no longer use a
market-related value of plan assets, which is an average value, to
determine the expected return on assets but rather will use the fair
value of plan assets. The company excludes the impact of the
mark-to-market adjustments resulting from these accounting changes in
evaluating performance. In fiscal 2015, the company incurred losses of
(2) In fiscal 2015, the company implemented a new enterprise design and
initiatives to reduce costs and to streamline its organizational
structure. In fiscal 2015, the company recorded Restructuring charges of
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Source:
Campbell Soup Company INVESTOR CONTACT: Ken Gosnell, 856-342-6081 ken_gosnell@campbellsoup.com or MEDIA CONTACT: Carla Burigatto, 856-342-3737 carla_burigatto@campbellsoup.com