Campbell Soup Co. booked a drop in sales and earnings for the first half of its financial year today (17 February), with share losses in the US company’s fresh division hurting the group results.
In the first six months of Campbell’s financial year, a period that ran until the end of January, sales declined 1% to US$4.37bn. President and CEO Denise Morrison said during the second quarter the group’s fresh foods division, which includes the Bolthouse Farms brand, came under pressure. “Declines were most prominent in Campbell Fresh driven by a market share decline and weather-related issues in carrots, capacity constraints from the Bolthouse Farms Protein Plus recall last June, and Garden Fresh Gourmet,” she said.
For the first half, the company booked a steeper drop in EBIT, which fell 9% year-on-year.
Excluding items impacting comparability, adjusted EBIT was “comparable to the prior year” at $905m, Campbell suggested. The company said this reflected a higher adjusted gross margin percentage and lower administrative expenses, offset by higher marketing and selling expenses and volume declines.
The company revealed organic growth turned negative, falling 1% in the period. Lower volumes hit the group’s profitability, Campbell conceded. In the comparable period of last year, Campbell’s organic growth was flat.
Campbell updated the market on its cost-savings programme. Launched in 2015, the programme was targeting $300m in savings by 2018. Campbell said today it is now on-track to deliver this by the end of 2017, a year ahead of expectations, and raised its cost savings target to US$450m.
Looking to the remainder of 2017, Campbell said it continues to expect sales to increase by 0-1%, adjusted EBIT to increase by 1-4% and adjusted earnings per share to increase by 2-5%.