Campbell Soup's Mixed Bowl: Q4 Sales Miss, But Strong EPS And Cost Savings Shine

Campbell Soup Company CPB reported fourth-quarter net sales of $2.293 billion, up 11% year over year but missing the consensus estimate of $2.313 billion. Organic sales declined 1%.

Net sales from the Meals & Beverages segment increased 28% and the Snacks segment declined by 3%. Adjusted EPS was $0.63, up from $0.50 a year ago, beating the consensus of $0.62.

Gross profit rose to $675 million from $656 million, with a margin of 29.4% versus 31.7%. Adjusted gross profit increased to $719 million from $632 million, with a margin up 80 bps to 31.4%, driven by supply chain productivity improvements.

Campbell reported EBIT dropped to $77 million from $272 million, mainly due to impairment charges and pension adjustments. Adjusted EBIT rose 36% to $329 million, driven by higher adjusted gross profit from the acquisition and base business performance.

Through the fourth quarter, Campbell saved $950 million of its $1 billion cost savings goal, including $60 million in fiscal 2024, plus $10 million in synergies from the Sovos Brands integration.

CPB’s operating cash flow for the fiscal stood at $1.2 billion compared to $1.1 billion YoY, driven by changes in working capital.

Campbell returned $445 million in dividends, repurchased $67 million in stock, and had $301 million left in its $500 million buyback program. It also had $37 million remaining under the $250 million anti-dilutive repurchase program.

“We finished fiscal 2024 with solid fourth-quarter performance including sequential volume improvement and margin expansion versus prior year and delivered significant progress against our longer-term strategic plan despite an evolving consumer landscape,” commented Campbell’s President and CEO, Mark Clouse.

“The integration of Sovos Brands is progressing ahead of our expectations, marking a transformative shift in our Meals & Beverages growth trajectory. We’ve also advanced our Snacks margin journey, while delivering significant innovation and improved sales and marketing capabilities. All of this provides continued confidence in our ability to deliver sequential progress in fiscal 2025 as we continue to navigate the steady and ongoing recovery in the industry,” added Clouse.

2025 Outlook: Campbell expects net sales YoY growth of 9% to 11% and organic growth of 0% to 2%. The company sees Adjusted EPS of $3.12 – $3.22 versus the $3.23 consensus.

Price Action: CPB shares are trading lower by 0.74% at $49.80 premarket at the last check Thursday.

Photo via Wikimedia Commons