Campbell’s Soup Fourth Quarter Losses Largely Down to Disappointing Fresh Division Business
02 Sep 2016 --- Campbell’s Soup has reported losses and with “disappointing” results from the fresh division Campbell Fresh suffering the worst as operating profits fell by 62 percent. The US iconic soup giant has released its financial information for the fourth-quarter and full year. Earnings fell by two percent to US$235 million in the company’s fourth quarter.
Fourth quarter results show that sales of US$1.687 billion were comparable to prior years as the benefit from the acquisition of Garden Fresh Gourmet was offset by the decline in organic sales and the adverse impact of currency translation.
Organic sales decreased one percent primarily driven by Campbell Fresh, reflecting declines in carrots and carrot ingredients, as well as the impact from the voluntary recall announced on June 22 of Bolthouse Farms Protein PLUS drinks.
The estimated negative impact on net sales in the fourth quarter related to the recall and related production outages was approximately one percentage point.
“We finished the year in line with our guidance, including strong profit performance. However, I am not pleased with the results of our fourth quarter. The performance of our Campbell Fresh business, driven predominantly by execution issues, is disappointing. We have taken and are taking steps designed to ensure the business performs to its potential,” Denise Morrison, Campbell’s President and Chief Executive Officer, says in a company statement.
“We remain confident in our Campbell Fresh strategy and its ability to deliver long-term growth consistent with its portfolio role, as the business remains well-positioned to capitalize on the health and well-being consumer trend. For the year, Americas Simple Meals and Beverages and Global Biscuits and Snacks delivered significant margin expansion, driving double-digit profit growth. Despite the difficult quarter, we delivered adjusted EPS growth of 11 percent for the year.”
An overall US$81 million loss for the may to July quarter was reported, largely down to a US$141 million pre-tax charge. The company made a US$17m profit in the same quarter in 2015.
“While we have made progress, we recognize we need to deliver sales growth and it remains a top priority. Reflecting its confidence in our long-term growth prospects and strong profit performance this year, the Board declared a 12 percent increase in our quarterly dividend,” Morrison added.
