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Campbell Soup Company (NASDAQ: CPB) concluded the fourth quarter of fiscal 2024 with notable financial metrics. The company reported net sales of $2.3 billion, marking an 11% increase compared to the same period last year. This growth was largely attributed to the acquisition of Sovos Brands, Inc., which significantly bolstered Campbell’s sales figures. However, on an organic basis, which excludes the impact of acquisitions, net sales decreased by 1%, reflecting a slight decline in underlying business performance.
Earnings Before Interest and Taxes (EBIT) saw a mixed outcome. Reported EBIT plummeted by 72% to $77 million, primarily due to impairment charges and pension adjustments. However, adjusted EBIT, which excludes these one-time items, surged by 36% to $329 million, indicating strong operational performance when these extraordinary costs are set aside.
Similarly, the company’s Earnings Per Share (EPS) on a reported basis fell to a loss of $0.01 per share from earnings of $0.57 per share in the prior year. Adjusted EPS, however, rose by 26% to $0.63, surpassing market expectations.
Campbell Reports Adj. EPS of $0.63, Revenue of $2.3 B for Fiscal Q4
Comparing Campbell’s actual performance with market expectations reveals a positive surprise. Analysts had projected an EPS of $0.62 and revenue of $2.32 billion for the quarter. Campbell’s adjusted EPS of $0.63 exceeded these expectations, albeit slightly, demonstrating the company’s ability to manage costs and improve profitability despite a challenging economic environment. The reported net sales of $2.3 billion were marginally below the forecast but still represented significant growth driven by strategic acquisitions.
The company’s gross profit increased to $675 million from $656 million, with the gross profit margin slightly declining to 29.4% from 31.7% due to higher supply chain costs and inflation. Adjusted gross profit, which excludes certain costs, improved to $719 million from $632 million, showcasing effective cost management and productivity improvements. Marketing and selling expenses decreased by 6% to $188 million, primarily due to lower advertising and consumer expenses, indicating a strategic shift in marketing spend efficiency.
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Guidance for Fiscal 2025
Looking ahead, Campbell provided a balanced outlook for fiscal 2025, reflecting both optimism and caution. The company anticipates net sales growth of 9% to 11%, factoring in the full-year contribution from Sovos Brands and the impact of the Pop Secret business divestiture.
Organic net sales are expected to be flat to up 2%, indicating modest growth in the core business. The guidance also includes a benefit from an additional 53rd week in fiscal 2025, estimated to contribute approximately 2 points of growth to both reported and organic net sales and adjusted EBIT.
Adjusted EBIT is projected to grow by 9% to 11%, supported by productivity improvements and cost-saving initiatives estimated at $70 million. Despite the inflationary pressures, Campbell plans to mitigate these through various levers, including supply chain efficiencies.
Adjusted EPS is forecasted to increase by 1% to 4%, with Sovos Brands expected to be neutral to earnings and the Pop Secret divestiture dilutive by $0.04 per share. The company also expects adjusted net interest expenses to range between $350 million and $355 million due to higher debt levels and anticipated refinancing costs.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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