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 Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

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!