Announcing its fourth-quarter and full-year results, the company reported a 1% increase in organic sales from its Global Biscuits and Snacks division for the full year, with operating earnings up 10%. Division sales rose 2% in the fourth quarter, with earnings up 5%.
“The emphasis on growing our icon brands Goldfish, Tim Tam and Milano, as well as revenue management initiatives and improved supply chain performance, drove [the division's] results,” said Campbell’s president and CEO Denise Morrison, who reported a 1% dip in overall company sales for the full year.
The company added that Pepperidge Farm – under which the Goldfish brand is sold - had delivered a strong performance following increased advertising.
In the Asia Pacific region, the team drove “solid sales results in a highly competitive and concentrated trading environment,” reported Campbell’s, adding that growth in Arnott’s biscuits in Australia and New Zealand had been led by increased promotional activity.
Improving margins
“Looking ahead, we remain focused on delivering the division's role of expanding in both developed and developing markets while improving margins,” said Morrison.
The company is planning higher levels of investment to fund expanded Tim Tam distribution in the US and increased innovation in its fresh bakery business.
It will also invest in further support for Goldfish, including the Goldfish Made with Organic Wheat range it launched in June. The baked snacks are 70% organic and certified by the California Certified Organic Farmers (CCOF).
Campbell’s Soup Co full-year 2016 results
Net sales: $7,961m (-1%)
Adjusted EBIT: $253m (+11%)
Adjusted EPS: $2.94 (+11%)
In Australia, Campbell’s is focusing on strengthening its Arnott's brand through integrated marketing and consumer-driven innovation.
Morrison added that she expects continued growth in Malaysia and improved performance in China and Indonesia.
M&A targets
She also told analysts that the business divisions had mapped out specific merger and acquisitions targets, and were interested in tapping consumer behavior such as snacking through M&A as well as organic development.
Overall performance of the Campbell’s business lagged behind its Biscuits and Snacks division, with full-year reported and organic sales down 1% year on year. This was a result of the adverse impact of currency translation and a decline in organic sales, but had been partly offset by the acquisition of the Garden Fresh Gourmet business.
Decline in the Campbell Fresh
Sales in the fourth quarter also fell 1%, which was driven by decline in the Campbell Fresh business following a fall in carrots and carrot ingredients, as well as the impact from a voluntary recall in June of Bolthouse Farms Protein Plus drinks.
“We finished the year in line with our guidance, including strong profit performance,” said Morrison.
“However, I am not pleased with the results of our fourth quarter. The performance of our Campbell Fresh business, driven predominantly by execution issues, is disappointing,” she said, adding that the business is taking steps to ensure the business performs to its potential.
“For the year, our Americas Simple Meals and Beverages and Global Biscuits and Snacks divisions delivered significant margin expansion, driving double-digit profit growth.”