On the money: We need to accelerate "transition" - Campbell CEO

The changes Campbell Soup Co. chief Denise Morrison is looking to make at the US food giant are taking longer than expected and need to be accelerated, she has admitted.

Morrison outlined Campbell's new "strategic direction" at a major meeting with investors last July. The strategy focuses on expanding in three "core categories" - simple meals, backed snacks and healthy beverages. The group also wants to expand its international presence, particularly in emerging markets.

Speaking after Campbell announced its full-year results yesterday, Morrison said it had "planted the seeds to return Campbell to sustainable, profitable net sales growth". 

However, she admitted: "Our transition is taking us longer than we anticipated. A year ago, we expected that in fiscal 2013, we would return to growth levels consistent with our long-term targets on our core business. As we said at our analyst meeting in July, we expect the core business to return to growth this year but will not get all the way there due to a tougher environment than originally expected."

Campbell yesterday booked a drop in full-year profits as higher costs and increased spending on promotions hit earnings.

In the 12 months ended 29 July, earnings amounted to US$774m, a 0.2% decline on the prior-year period. Excluding items impacting comparability in both periods, adjusted net earnings declined 7% to $783m.

Sales dropped to $7.70bn from $7.72bn in the prior year. Campbell blamed the revenue decline on the increased promotional expenditure and a volume and mix impact of two percentage points.

However, in the last three months of the year, Campbell reported a 3% increase in sales on an organic basis. President and CEO Denise Morrison said Campbell saw "strong gains" in US soup and simple meals. Reported sales were flat.

Net earnings climbed to $127m from $100m a year earlier, although Cost inflation and spending on marketing and promotions hit adjusted EBIT, which fell 10%.

Morrison said Campbell has become "very disciplined" about the way it is going about the strategy but added: "All of us at Campbell's agree that the pace of our progress needs to accelerate. At the same time, we remain focused and energised by our new strategic direction. We are confident that the course we've charted positions Campbell for long-term success, and we are committed to creating shareholder value by driving sustainable, profitable net sales growth."

Separately, Campbell said it was continuing to look for "good, value-accretive acquisition targets or partnership opportunities".

"We do feel like we've still got some capacity within our balance sheet, and so we continue to try to advance our strategies by looking for those kinds of opportunities," said CFO Craig Owens. "Having said that, they're few and far between out there, and we're very rigorous in the way that we evaluate them. But we have not - we haven't stopped looking."

In July, Campbell snapped up US dressings and juice firm Bolthouse Farms in a deal worth US$1.55bn.