Campbell Soup Co. Survive Difficult Third Quarter | 2021-06-10

Camden, NJ. – Campbell Soup Co. faced a number of performance-impacting challenges in the third quarter of fiscal year 2021. Problems extended to weather turmoil, commodity inflation, changes in the snack business, and general uncertainty for the United States and the world to overcome the worst of COVID-19.

At a conference call on June 9th to discuss quarterly results, President and CEO Mark A. Clouse categorized the headwinds the company faced into three buckets. The first was an external factor, which he said was bigger than expected.

“We, like everyone else, faced significant inflation, primarily related to spikes in transportation costs, partly with the tensions of the Texas winter storm in supply chain logistics. , The result of a two-week closure of a facility in Paris, Texas, “said Clouse. “The second bucket I characterize is the transition item we are working on in the process of getting out of the COVID-19 environment and fully recovering supply. This includes increasing levels of demand, persistent labor issues, Includes areas such as additional investment in higher cost co-manufacturers to fully recover on supply.

He called the third bucket “execution-related” and said it was due to ongoing changes in Campbell’s snack business unit. Initiatives include the adoption of SAP, the closure of a factory in Columbus, Georgia, and three capacity expansion projects at other facilities.

“… It was already a tough quarter because it’s related to snacks, but it put more pressure on us,” said Claus.

Net income for the quarter to May 2 was $ 160 million, equivalent to 53 cents per common share, earning $ 168 million (56 cents per share) in the third fiscal year of 2019. It decreased slightly compared to the quarter.

Quarterly sales were down from $ 2.24 billion in the previous year to $ 1.98 billion. This reflects the difficulty of comparing it to the third quarter of 2020, when household consumption surged.

Meal & Beverage sales fell 14% during the quarter to $ 1.04 billion. Operating income for the segment decreased by 35%. According to the company, the decline was primarily due to lower sales volumes and lower gross margin, partially offset by lower marketing and selling expenses.

“US soup sales were down 21% due to reduced volumes of condensed soups, ready-to-eat soups and soups, and up 35% year-over-year,” said Chief Financial Officer Mick J. Beakhuisen. I am.

Snack sales were down 8% to $ 945 million. Business unit revenues were down 29%. Brands affected by the decline in sales volume include Pop Secret, Cape Cod, Snyder’s of Hanover and Lance.

The company adjusts its guidance for fiscal year 2021 based on its third-quarter results and the expected decline in profit margins in the fourth quarter in connection with COVID-19’s transition from the business environment and commodity inflation. Did. Management currently forecasts fiscal year 2021 sales to fall between $ 8.38 billion and $ 8.43 billion. In 2020, sales were $ 8.69 billion.

Adjusted earnings per share are expected to increase from $ 3.03 to $ 3.11 to $ 2.90 to $ 2.93 in the previous year. Campbell Soup Co. Survive Difficult Third Quarter | 2021-06-10

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