Vending

Campbell Soup boosts Q2 2021 sales, earnings

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March 10, 2021

Campbell Soup Co. net sales, both reported and organic, increased 5% from $2.16 billion in Q2 2020 to $2.28 billion for Q2 2021 driven by gains in meals, beverages and in snacks, according to an earnings report.

Earnings before interest and taxes rose 15% from $350 million to $401 million on a reported basis, second quarter over second quarter, and 8% from $364 million to $393 million on an adjusted basis. Diluted earnings per share jumped 43% from 56 cents to 80 cents as reported, and 17% from 72 cents to 84 cents adjusted.

The growth for the three months ending Jan. 31, 2021 was driven by a 4% increase in volume and mix reflecting heightened demand as at-home food consumption remained elevated as a result of the COVID-19 pandemic, partly offset by declines in foodservice and in partner brands within the Snyder's-Lance portfolio.

The $2.28 billion in quarterly revenue missed analyst expectations by $20 million, according to Seeking Alpha, while projected fiscal 2021 EPS of $3.03 to $3.11, reflects growth of 3% to 5%, compared to analyst expectations of $3.03.

Shares traded at $46.93 on Wednesday against a 52-week range of $39.52 to $55.85.

"We delivered another quarter of strong results, with top-line growth in both segments — partly tempered by foodservice and supply constraints caused by COVID-19 — as well as continued growth in EBIT and EPS," Mark Clouse, president and CEO, said in the release. "In addition, nearly 75% of our brands grew or held share which was an important goal for the quarter. Given this strong performance, we are providing full-year fiscal 2021 guidance and we are confident in the long-term growth potential of Campbell."

Net sales for meals and beverages rose 6% in Q2 reflecting gains across U.S. retail products, including U.S. soup, V8 beverages, Prego pasta sauces and Campbell's pasta, partially offset by a decline in foodservice sales.

Net sales for snacks increased 4% in the second quarter driven by salty snacks, including Kettle potato chips, Late July snacks, Cape Cod potato chips and Pop Secret popcorn. Gains were also reported for fresh bakery products, including Pepperidge Farm Farmhouse products.

Gains in the snack segment were partially offset by declines in partner brands within the Snyder's-Lance portfolio and Lance sandwich crackers which faced supply constraints in the quarter.

Net sales increased 6% from $4.35 billion in the first half of 2020 to $4.62 billion for the first half of 2021. Organic net sales, which exclude the impact from the sale of the European chips business, increased 7% from the prior year driven by gains in meals, beverages and snacks.

Earnings before taxes increased 29% from $667 in the first half of 2020 to $862 million for the first half of 2021. Excluding items impacting comparability, adjusted EBIT increased 13% to $856 million reflecting higher sales volume, improved gross margin performance and higher adjusted other income, offset partly by increased adjusted administrative expenses.

The company reported diluted EPS rose from $1.12 in the first half of 2020 to $1.82 in the first half of 2021. Excluding items impacting comparability, adjusted EPS increased 23% to $1.86 per share reflecting the increase in adjusted EBIT and lower adjusted net interest expense.

Following strong first half results, Campbell is providing full-year fiscal 2021 guidance that reflects cycling the COVID-19 related surge in demand during the second half of fiscal 2020, and an expected sequential improvement in margin through the remainder of fiscal 2021. Fiscal 2020 benefited from a 53rd week, which was estimated to be worth 2% of net sales, and approximately 4 cents on adjusted EPS.

The company projects a decline in 2021 net sales between 2.5% to 3.5%, and a decline in organic sales between 0.5% and 1.5%.

Adjusted EPS is projected to grow between 3% to 5% in fiscal 2021, reaching $3.03 to $3.11 compared to $2.95 in fiscal 2020.

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