Campbell Soup Company (CPB): Soup Anyone? – General Mills, Inc. (GIS), Kraft Foods Group Inc (KRFT)

Page 1 of 2

Berkshire Hathaway’s recent $28 billion H.J Heinz acquisition threw the spotlight on a few food companies, one of them being Campbell Soup Company (NYSE:CPB). The day the acquisition was announced, its shares rose 6% and are nowtrading at the higher end of the 52-week range, near the high of $42.

Campbell Soup Company (NYSE:CPB)History and turnaround strategies:

  • Campbell Soup Company (NYSE:CPB), with its iconic red-and-white packaging and popular soups such as Tomato and Cream of Chicken, was a well-known household brand until it began to lose its market share in the last few years. It market share dipped to 46% vs. 51% in 2007, one of the main reason being its ill-advised move into low-sodium formulations.
  • When Denise Morrison took over in 2010 as CEO, she made the right decision to change the focus towards healthy products, fresh food and easy-to-prepare items. She focused on three main strategies : 1) Stabilize and then profitably grow North America soup and simple meals; 2) Expand the company’s international presence; and 3) Continue to drive growth in healthy beverages and baked snacks.
  • At the recent annual Consumer Analyst Group of New York (CAGNY), the Company announced that it has made significant progress and has been able to stabilize its Soup and Simple Meals business. This was corroborated by its strong 2H13 results as the segment rebounded with sales increasing 2% and EBIT increasing 7%. This was mainly due to increased focus on re-engaging the consumer and innovation and the Company has mentioned that it will continue to focus on innovation introducing more than 50 new products by Aug 2013, up from only 3 in 2010 and 2011.
  • With an intention to increase its international expansion,  on 14th Feb it announced an arrangement with Grupo Jumex and Conservas La Costeña that will help expand the companys access to manufacturing and distribution capabilities in Mexico. As a result of these agreements, Campbell will close its plant in Villagrán, Mexico, and recorded a restructuring charge of $6 million in 2Q13.
  • Further, in line with its strategy the company also acquired Bolthouse Farms in July 2012, the manufacturer of healthy food products. The acquisition has given it access to $12 billion packaged fresh foods market as well as  complements its existing V8 business beverage. For 2H13, Bolthouse contributed $195 million (8%) to total sales and $15 million (2%) to operating income. Company guided that it will contribute ~$750 million to sales and add $0.05 to $0.07 to adjusted EPS in FY13.

Financial performance:

  • On Feb. 15, Campbell announced its 2Q13 results, sales were up 10% due to 1% organic growth and 9% from its Bolthouse acquisition.
  • It reaffirmed its FY13 guidance: Sales growth of 10-12% with adjusted EBIT growth of 4-6% and adjusted EPS growth of 3-5% ($2.51 and $2.57).
  • The most important factor for Campbell is its shareholder friendly policy. It has consistently maintained a dividend payout ratio of 46% in the last 4-years (in 2008 it had a dividend payout ratio of 28% due to economic recession). Further, it also an excellent share repurchase program in place. Despite these positives, the Company’s share price remains range-bound between $30-$40, ever since the recession and hence I am of the opinion, that it is only a matter of time, before the shares start moving upwards.
Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!