American producer of canned soups and related products, Campbell Soup, reported fourth quarter and full year results that beat on earnings but missed on revenues.
The company reported a quarterly profit that was better than expected but didn’t beat on sales expectations. For the fourth quarter, adjusted earnings were 25 cents, beating the 24 cents that analysts expected by a penny. Revenue at $2.22 billion fell short of the $2.24 billion that analysts were waiting for.
For the full year Campbell Soup reported EPS of $0.86 on sales of $8.685 billion.
Keith McLoughlin, who is the company’s Interim President and Chief Executive Officer, remarked on the earnings call, “At the 3 months in my role as Interim CEO and digging into the operations with the new management team, it’s abundantly clear to me that the company is in need of greater focus and discipline.”
He said, “We have to run Campbell with a much tougher set of operating and financial standards. Despite our execution challenges, during the year we completed the acquisition of Snyder’s-Lance, the largest transaction in the company’s history which expands and strengthens our position in the growing snacks category. We also added Pacific Foods, a leader in organic soups and broths through our company. Both acquisitions bring valuable and growing brands that align with and complement our core capabilities and a more focused portfolio.”
He also said, “Fiscal 2018 was a challenging year for Campbell. These results and our outlook for fiscal 2019 reinforce the need for the significant actions we announced this morning as part of our comprehensive, Board-led strategy and portfolio review. We believe these actions will put us on a path to create sustainable shareholder value.”
Campbell Soup also announced plans to divest two international units and its fresh food business.
McLoughlin said during the call, “Simply put, we lost focus. We had too many initiatives that made the company unnecessarily complex. We were in the food business and the [agriculture] business. We had growth businesses, and we had cash businesses. We were focused on startup businesses and venture-capital investment. We aggressively pursued the important consumer megatrend of health and well-being without having clarity on our source of uniqueness or whether we brought a competitive advantage to the space, and we depended too much on M&A to shape our business strategy.”
Looking ahead at fiscal 2019, Campbell Soup has projected sales in the range of $9,975-$10,100 million. Adjusted EBIT is expected to be in the range of$1,370-$1,410 million. Adjusted earnings per share are envisioned in the range of $2.45-$2.53 per share.
Activist investors have been pushing the company to sell, including Dan Loeb’s Third Point, which recently disclosed a 5.65 percent stake in the company and called a sale of the business the “only justifiable outcome.”
Stifel analysts led by Christopher Growe said, “Campbell Soup has struggled to achieve its long-term guidance over the past 5+ years, and we believe soft sales growth environment will persist for the foreseeable future, given the company’s exposure to the slow growing/declining soup business and its lack of international sales exposure (business to be divested).”