Campbell Soup Company reported results for its first-quarter fiscal 2023.
Highlights
- Net sales and organic net sales increased 15% due to inflation-driven pricing, brand strength and continued supply recovery.
- Reported earnings before interest and taxes (EBIT) increased 16% to $436 million. Adjusted EBIT increased 15% to $449 million.
- Reported earnings per share (EPS) increased 15% to $0.99. Adjusted EPS increased 15% to $1.02.
- Raises full-year fiscal 2023 guidance based on strong first-quarter results, sustained brand momentum and strengthened supply chain.
“Our strong first-quarter results reflect our continued success in driving the relevance of our brands and improving our execution across our supply chain,” Campbell’s President and CEO Mark Clouse, said in the announcement. “Through a combination of inflation-driven pricing actions and productivity improvements, we have substantially mitigated significant inflationary pressure in the quarter while continuing to provide quality and value to consumers. We are investing in the equity of our brands through effective marketing, delivering robust innovation and deploying efficient capital spending to ensure we continue to fuel improving in-market shares and growth. With the momentum of our strong first-quarter performance and confidence in our strengthened supply chain, we are raising our full-year fiscal 2023 guidance while taking into account the volatile economic environment.”
First-quarter results
Net sales in the quarter, both as reported and organic, increased 15% versus the prior year to $2.6 billion. The combined impact of inflation-driven pricing and sales allowances more than offset volume declines.
Gross profit increased to $834 million from $722 million in the prior year. As a percent of sales, gross profit margin was 32.4% compared to 32.3% in the prior year. Excluding items impacting comparability, adjusted gross profit increased to $829 million from $727 million. Excluding items impacting comparability, adjusted gross profit margin decreased 30 basis points to 32.2% as continued cost inflation and higher other supply chain costs as well as unfavorable volume / mix were mostly mitigated by inflation-driven pricing actions and productivity improvements.
As reported EPS increased to $0.99 per share compared to $0.86 per share in the prior year. Excluding items impacting comparability, adjusted EPS increased $0.13, or 15%, compared to the prior year to $1.02 primarily reflecting the increase in adjusted EBIT, partially offset by a higher adjusted effective tax rate.
Full-year fiscal 2023 guidance
Based on the company’s strong first quarter results which reflect continued demand for its products and improved supply chain execution, Campbell is raising its full-year fiscal 2023 net sales, adjusted EBIT and adjusted EPS guidance provided on September 1, 2022, while taking into account the volatile economic environment.
Meals & Beverages
Net sales, both reported and organic, increased 15% in the quarter primarily due to increases in U.S. retail products, including U.S. soup and Prego pasta sauces, as well as gains in foodservice. Inflation-driven pricing and sales allowances and lower levels of promotional spending were partially offset by volume declines. Sales of U.S. soup increased 11% due to sales increases in ready-to-serve soups, condensed soups and broth.
Operating earnings in the quarter increased 18% primarily due to higher gross profit, partially offset by higher marketing and selling expenses. Gross profit margin increased driven by the impact of inflation-driven pricing actions, supply chain productivity improvements and lower levels of promotional spending, partially offset by higher cost inflation and other supply chain costs and unfavorable volume / mix.
Snacks
Net sales, both reported and organic, increased 15% driven by sales of power brands, which were up 21%. Sales growth was driven by increases in cookies and crackers, primarily Goldfish crackers, and in salty snacks, primarily Snyder’s of Hanover pretzels, and both Kettle Brand and CapeCod potato chips. Inflation-driven pricing and sales allowances were partly offset by volume declines and increased promotional spending relative to moderated levels in the prior-year quarter.
Operating earnings in the quarter increased 20% primarily due to higher gross profit and lower administrative expenses, partially offset by higher marketing and selling expenses. Gross profit margin decreased driven by higher cost inflation and other supply chain costs, unfavorable volume/mix and higher levels of promotional spending, partially offset by the impact of inflation-driven pricing actions and supply chain productivity improvements.
