- Focusing Portfolio on Campbell Snacks
and Campbell Meals and Beverages in North America, Leveraging
Iconic Brands and Leading Market Positions
- Pursuing Divestitures of Campbell
International (including Arnott’s and the Kelsen Group) and
Campbell Fresh to Increase Focus; Proceeds will be Used to
Significantly Reduce Debt
- Raising Overall Cost Savings Target to
$945 Million by FY2022; Includes Snyder’s-Lance Savings and $150
Million in New Actions
- Updates Long-term Targets
Campbell Soup Company (NYSE:CPB) today announced
significant actions it is taking as part of its Board-led strategy
and portfolio review to improve performance and drive shareholder
value. The actions include:
1. Focusing the company on two distinct
businesses, Campbell Snacks and Campbell Meals and Beverages, in
its core North American market;2. Pursuing the divestitures of
non-core businesses to focus and improve the company’s portfolio;
proceeds will be used to significantly reduce debt; and,3.
Increasing its cost savings target to $945 million by FY2022,
including the expected Snyder’s-Lance savings.
Campbell’s interim President and CEO Keith McLoughlin said,
“Campbell’s Board of Directors considered a full slate of strategic
options, including optimizing the portfolio, divesting businesses,
splitting the company, and pursuing a sale. The Board concluded
that, at this time, the best path forward to drive shareholder
value is to focus the company on two core businesses in the North
American market with a proven consumer packaged goods business
model. Importantly, the Board remains open and committed to
evaluating all strategic options to enhance value in the
future.
“Our plan will build upon our existing strengths. Our new
leadership team will concentrate on significantly improving
operational discipline through a rigorous management model that
aligns the enterprise from strategy through execution. We are
moving forward with a sense of urgency to complete these changes in
fiscal 2019, setting the foundation for sustainable, profitable
growth in fiscal 2020 and beyond. The Board and management team are
committed to deleveraging the company, retaining our investment
grade credit rating and maintaining our dividend. We will pursue
further actions in addition to those announced today to optimize
our portfolio and performance.”
Building a Focused North American
Company
Campbell will continue to provide consumers with great tasting,
high-quality real food. Across the portfolio, the company’s brands
will leverage consumer insights and trends to drive relevance,
including health and well-being, snacking and convenience. Each of
Campbell’s brands will be managed within a focused and disciplined
framework of two differentiated portfolio roles:
- Drive Profitable Growth – These
powerful and exciting brands will be managed to grow
disproportionately relative to the categories in which they
compete. These include leading brands such as Cape Cod, Goldfish,
Kettle Brand, Lance, Late July, Pace, Pacific, Pepperidge Farm
Farmhouse and Milano cookies, Prego and Snyder’s of Hanover.
Investments in innovation and consumer engagement will enable these
brands to leverage evolving consumer tastes and trends.
- Maximize Margin & Cash Flow
– These at-scale brands will be managed to generate consistent
profit and cash flow. These include leading brands such as
Campbell’s soup, Pepperidge Farm fresh bakery, SpaghettiOs and V8.
These brands will be managed with disciplined focus and aligned
investments to support their strong market positions, to optimize
operating margins and cash flow and to fulfill their equally
important role in Campbell’s portfolio.
Pursuing Divestitures of Non-Core
Businesses; Significantly Reduce Debt
Campbell has engaged Goldman Sachs and Centerview Partners to
commence a process to divest its Campbell International and
Campbell Fresh businesses in a manner that maximizes value.
Campbell International consists of Arnott’s and the Kelsen Group,
along with the company’s manufacturing operations in Indonesia and
Malaysia and its businesses in Hong Kong and Japan. Campbell Fresh
includes Bolthouse Farms, Garden Fresh Gourmet and the company’s
refrigerated soup business. Fiscal 2018 net sales of these
businesses totaled approximately $2.1 billion. Proceeds from the
divestitures will be used to significantly reduce debt.
Increased Cost Savings
As a result of this more focused portfolio, Campbell is
increasing its cost savings target by $150 million. The company
plans to achieve these additional savings by streamlining its
organizational structure, expanding its zero-based budgeting
efforts and continuing to optimize its manufacturing network. These
savings are in addition to the company’s prior target of $500
million and the previously announced $295 million in target
synergies and run-rate cost savings from Campbell’s integration of
Snyder’s-Lance. Combined, these programs will bring Campbell’s
total cost savings target to $945 million by the end of fiscal
2022.
Updated Long-Term
Targets*
Campbell has adjusted its long-term targets to reflect the
company’s actions and more focused portfolio.
- Organic net sales growth of 1 to 2
percent
- Adjusted EBIT growth of 4 to 6
percent
- Adjusted EPS growth of 7 to 9
percent
In addition, Campbell expects a net debt to adjusted EBITDA
ratio of 3.0x by 2021.
These targets reflect expectations beyond fiscal 2019 and assume
the completion of the planned divestitures of Campbell
International and Campbell Fresh.
*A non-GAAP reconciliation is not provided since certain items
are not estimable, such as pension and postretirement
mark-to-market adjustments, and these items are not considered to
reflect the company’s ongoing business results.
Conference Call and Webcast
Campbell will host a 90-minute conference call to discuss its
earnings results and the outcome of its strategic review today at
8:30 a.m. EDT. To join, dial +1 (844) 428-1627 in the U.S. or +1
(409) 350-3941 internationally. The access code is 5676627. Access
to a live webcast of the call with accompanying slides, as well as
a replay of the call, will be available at
investor.campbellsoupcompany.com. A recording of the call will also
be available until 11:59 p.m. on Sept. 13, 2018, at +1 (404)
537-3406. The access code for the replay is 5676627.
About Campbell Soup Company
Campbell (NYSE:CPB) is driven and inspired by our Purpose, "Real
food that matters for life's moments." For generations, people have
trusted Campbell to provide authentic, flavorful and affordable
snacks, soups and simple meals, and beverages. Founded in 1869,
Campbell has a heritage of giving back and acting as a good steward
of the planet's natural resources. The company is a member of the
Standard and Poor's 500 and the Dow Jones Sustainability Indexes.
For more information, visit www.campbellsoupcompany.com or follow
company news on Twitter via @CampbellSoupCo. To learn more about
how we make our food and the choices behind the ingredients we use,
visit www.whatsinmyfood.com.
Forward-Looking Statements
This release contains “forward-looking statements” that reflect
the company’s current expectations about the impact of its future
plans and performance on the company’s business or financial
results. These forward-looking statements, including any statements
made regarding sales, EBIT and EPS guidance, rely on a number of
assumptions and estimates that could be inaccurate and which are
subject to risks and uncertainties. The factors that could cause
the company’s actual results to vary materially from those
anticipated or expressed in any forward-looking statement include:
(1) the company’s ability to execute on and realize the expected
benefits from the actions it intends to take as a result of its
recent strategy and portfolio review; (2) the ability to
differentiate its products and protect its category leading
positions, especially in soup; (3) the ability to complete and to
realize the projected benefits of planned divestitures and other
business portfolio changes; (4) the ability to realize the
projected benefits, including cost synergies, from the recent
acquisitions of Snyder’s-Lance and Pacific Foods; (5) the ability
to realize projected cost savings and benefits from its efficiency
and/or restructuring initiatives; (6) the company’s indebtedness
and ability to pay such indebtedness; (7) disruptions to the
company’s supply chain, including fluctuations in the supply of and
inflation in energy and raw and packaging materials cost; (8) the
company’s ability to manage changes to its organizational structure
and/or business processes, including selling, distribution,
manufacturing and information management systems or processes; (9)
the impact of strong competitive responses to the company’s efforts
to leverage its brand power with product innovation, promotional
programs and new advertising; (10) the risks associated with trade
and consumer acceptance of product improvements, shelving
initiatives, new products and pricing and promotional strategies;
(11) changes in consumer demand for the company’s products and
favorable perception of the company’s brands; (12) changing
inventory management practices by certain of the company’s key
customers; (13) a changing customer landscape, with value and
e-commerce retailers expanding their market presence, while certain
of the company’s key customers maintain significance to the
company’s business; (14) product quality and safety issues,
including recalls and product liabilities; (15) the costs,
disruption and diversion of management’s attention associated with
campaigns commenced by activist investors; (16) the uncertainties
of litigation and regulatory actions against the company; (17) the
possible disruption to the independent contractor distribution
models used by certain of the company’s businesses, including as a
result of litigation or regulatory actions affecting their
independent contractor classification; (18) the impact of non-U.S.
operations, including trade restrictions, public corruption and
compliance with foreign laws and regulations; (19) impairment to
goodwill or other intangible assets; (20) the company’s ability to
protect its intellectual property rights; (21) increased
liabilities and costs related to the company’s defined benefit
pension plans; (22) a material failure in or breach of the
company’s information technology systems; (23) the company’s
ability to attract and retain key talent; (24) changes in currency
exchange rates, tax rates, interest rates, debt and equity markets,
inflation rates, economic conditions, law, regulation and other
external factors; (25) unforeseen business disruptions in one or
more of the company’s markets due to political instability, civil
disobedience, terrorism, armed hostilities, extreme weather
conditions, natural disasters or other calamities; and (26) other
factors described in the company’s most recent Form 10-K and
subsequent Securities and Exchange Commission filings. The company
disclaims any obligation or intent to update the forward-looking
statements in order to reflect events or circumstances after the
date of this release.
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version on businesswire.com: https://www.businesswire.com/news/home/20180830005328/en/
Campbell Soup CompanyINVESTOR:Ken Gosnell,
856-342-6081ken_gosnell@campbellsoup.comorMEDIA:Thomas Hushen,
856-342-5227thomas_hushen@campbellsoup.com
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