Campbell Soup (CPB, Financial) released the financial results for its first quarter of fiscal 2021 on Dec. 9 before the market opened. Both earnings and revenue beat Zacks Consensus estimates.
Snapshot of the quarter
The American processed food and snack company posted earnings per share of $1.02 (up 82% year-over-year), which was higher than analyst estimates of 91 cents. Revenue of $2.34 billion was up 7% on a year-over-year basis and edged past analysts' projections by 1.01%.
The adjusted gross margin increased to 34.8%. This was largely driven by favourable product mix coupled with improved operating leverage. Supply chain and cost saving measures also helped. This was only partly negated by higher costs and other supply chain expenses.
Segment performance
In the Meals and Beverages segment, net sales grew 12% compared to the prior-year quarter. The company benefitted from strong U.S. retail business and gains in Canada. This was partially offset by the decline in the foodservice business.
The U.S. soup segment saw sales rise 21%, driven primarily by gains in condensed soups, ready-to-serve soups and broth. Operating profit in the segment was up 18%, positively impacted by sales volume gains and improved gross margin performance.
Sales in the snacks segment increased 1%. The company benefitted from robust sales of fresh bakery products, Pepperidge Farm cookies, Kettle Brand and Cape Cod potato chips and Snack Factory Pretzel Crisps. Goldfish crackers witnessed flat sales during the quarter. The segment's operating profit inched up 11%. The increase was primarily due to lower selling costs and marketing overheads, partially negated by higher administrative expenses.
Financials and dividend
At the end of first quarter, the company had cash and cash equivalents of $722 million and long-term debt of $5 billion.
The company earned $180 million in cash from operating activities during fiscal first quarter.
The Board of Directors of the company declared a quarterly dividend of 37 cents per share, which will be payable to the shareholders on Feb. 1, 2021.
Financial forecast
Campbell has provided guidance for the second quarter of fiscal 2021. The company foresees its sales to grow 5% to 7%, which excludes the impact of the divested European chips business. Adjusted EPS is predicted to fall within the range of $0.81 to $0.83.
Disclosure: I do not hold any positions in the stocks mentioned.
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