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Campbell Soup : CEO quits; company cuts forecast, to review portfolio

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05/18/2018 | 11:18pm CEST
FILE PHOTO: Tins of Campbell's Tomato Soup are seen on a supermarket shelf in Seattle

(Reuters) - Campbell Soup Co Chief Executive Officer Denise Morrison unexpectedly stepped down on Friday, as the company issued a bleak forecast for the year and said it would embark on a review of its many brands.

Campbell's shares slumped 12 percent in mid-afternoon trading, hitting a more than five-year low and putting them on track for the worst one-day decline since 1999.

Food companies like Campbell have been pressured as consumers increasingly move away from processed food toward healthier options. The shifting consumer tastes are partly to blame for four straight years of declines at Campbell's U.S. soup business, a period that Morrison oversaw.

Campbell in 2015 reorganized into three divisions, creating the Campbell Fresh unit after combining what was a Packaged Fresh division with soups sold to supermarket delis. But Campbell Fresh struggled, resulting in a two-year decline in organic sales.

On Friday, Campbell Soup posted a loss of $393 million (£291.7 million), or $1.31 per share, for the fiscal third quarter ended April 29, compared with a profit a year ago, mainly due to a $619 million charge related to Campbell Fresh.

Morrison, 64, departs the company after seven years at the helm. Campbell provided no reason for her departure. It named board member Keith McLoughlin, 61, a former CEO of vacuum maker Electrolux, as interim CEO.

Chief Financial Officer Anthony DiSilvestro said the company would conduct a critical review of its portfolio over several months. "Everything is on the table. There are no sacred cows," he said on a conference call with analysts.

Campbell expects to discuss the review outcome when it reports fourth-quarter results in late August, DiSilvestro said in a statement.

The company has not yet retained financial advisers to assist with the review, according to a person familiar with the matter. JPMorgan analyst Ken Goldman said Campbell Fresh, which sells baby carrots and high-end juices, could be a top priority. The unit had sales of $251 million in the third quarter.

"We are all disappointed with the results of C-Fresh, and we acknowledge that they are unacceptable," DiSilvestro said.

Early last month the company announced the Campbell Fresh business would be put within a new accelerator unit focussed on driving long-term growth, and headed by Ana Dominguez. Dominguez, who was previously president of Campbell Canada, is expected to continue in the new position, the person familiar with the matter said.

In April, the company also elevated Luca Mignini, the head of the unit that makes Goldfish Crackers and Pepperidge Farm cookies, to chief operating officer, underscoring its shifting emphasis from soups to snacks - and potentially putting him in line for the top job.

DiSilvestro blamed tariffs as contributing to Campbell's rising costs. President Donald Trump announced sweeping tariffs on steel and aluminium to help the domestic steel industry on March 20. [nL1N1S80QP]

"The issue is primarily one of cost inflation and we're seeing and expecting an acceleration on the rate of inflation across a number of ingredient and packaging items," DiSilvestro said. "For example, we expect double-digit increases on steel and aluminium. A lot of that is driven or all of it's driven by the impact of anticipated tariffs.”

Excluding one-time items, the company earned 70 cents per share, 10 cents above analysts' average estimate, according to Thomson Reuters I/B/E/S. Net sales rose 15 percent to $2.13 billion.

Campbell said the acquisition of snacks maker Snyder's-Lance, which it closed just eight weeks ago, would reduce adjusted earnings in fiscal year 2019.

The company expects earnings per share to fall 5 percent to 6 percent, compared with its earlier forecast for a rise of 2 percent to 4 percent. The prior forecast did not include the impact from Snyder's-Lance.

(Additonal reporting by Harry Brumpton; Editing by Bernard Orr and Leslie Adler)

By Nivedita Balu and Siddharth Cavale

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Financials ($)
Sales 2018 8 725 M
EBIT 2018 1 392 M
Net income 2018 375 M
Debt 2018 9 743 M
Yield 2018 4,17%
P/E ratio 2018 21,93
P/E ratio 2019 12,46
EV / Sales 2018 2,31x
EV / Sales 2019 1,92x
Capitalization 10 402 M
Duration : Period :
Campbell Soup Technical Analysis Chart | CPB | US1344291091 | 4-Traders
Technical analysis trends CAMPBELL SOUP
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 16
Average target price 34,5 $
Spread / Average Target -0,40%
EPS Revisions
Keith R. McLoughlin President, Chief Executive Officer & Director
Les C. Vinney Chairman
Luca Mignini Chief Operating Officer & Senior Vice President
Anthony P. DiSilvestro Chief Financial Officer & Senior Vice President
Jim Prunesti Vice President-Global Engineering
Sector and Competitors
1st jan.Capitalization (M$)
CAMPBELL SOUP-28.62%10 402
NESTLÉ-9.07%239 352
DANONE-5.08%52 501