Campbell Soup (CPB) Updates on Key Strategic Initatives; Boosts FY15 EPS Outlook

Campbell Soup (NYSE: CPB) President and Chief Executive Officer Denise Morrison and other senior leaders will meet with investors today to provide an update on key business strategies and outline important actions the company is taking to improve its financial performance.

In her presentation, Morrison will discuss Campbell’s key strategic imperatives, including plans to be more transparent about how its foods and drinks are made to build greater consumer trust; and to increase the company’s focus on faster-growing categories and regions, such as health and well-being, packaged fresh and developing markets. Management will also provide an update on its ongoing enterprise redesign and cost savings initiatives.

Campbell executives will outline plans for the company’s three new divisions, each with a clear portfolio role:

• Americas Simple Meals and Beverages, the largest division and the company’s economic engine, will be managed for moderate growth and margin expansion and is focused on responding to consumer shifts with changes in its core portfolio and a more focused approach to innovation.
• Global Biscuits and Snacks, which unifies the Pepperidge Farm, Arnott’s and Kelsen businesses into a fully integrated biscuits and snacks portfolio, is focused on strengthening its core markets and expanding in developing markets.
• Campbell Fresh, which now combines recently-acquired Garden Fresh Gourmet with the Bolthouse Farms portfolio and Campbell’s retail refrigerated soups, is focused on building scale and accelerating growth in rapidly expanding packaged fresh categories as the company strengthens its health and well-being platform.

The company announced that it will change its reporting segments beginning in the first-quarter of fiscal 2016 to reflect its new divisional structure.

Cost Reduction Initiatives

Campbell will provide additional details on its previously announced enterprise redesign and cost reduction initiatives.

Campbell is achieving savings earlier than anticipated based on reductions in headcount, travel, consulting and non-working marketing. The company now expects approximately $75 million in savings from these cost reduction initiatives in fiscal 2015. As a result, the company is increasing its annual savings target from $200 million to $250 million, which it expects to achieve by the close of fiscal 2018. As previously disclosed, the company expects costs of $250-$325 million related to these initiatives through fiscal 2018.

Revises Fiscal 2015 Guidance for Continuing Operations

Campbell revised its previous full-year guidance for fiscal 2015, which ends Aug. 2, 2015.

Consistent with previous sales guidance, the company expects sales to decline by 1 percent, reflecting the negative impact of currency translation. Reflecting favorable gross margin performance and earlier-than-expected benefits from the previously announced cost reduction initiatives, Campbell now expects adjusted EBIT to decline -2 to -1 percent, compared to the previous guidance of being at the favorable end of the -7 to -5 percent range. The company expects adjusted EPS to be in the range of -1 to 0 percent, or $2.43 to $2.46 per share, compared to the previous guidance of being at the favorable end of the -5 to -3 percent range or $2.32 to $2.38 per share.

*** The Street sees FY15 revenue of $8.08 billion and EPS of $2.38.

This guidance is calculated on an adjusted base, which excludes the impact of a 53rd week in fiscal 2014 and includes an estimated 2-point negative impact from currency translation across sales, EBIT and EPS in fiscal 2015.

A detailed reconciliation of adjusted financial information to the reported information is included at the end of this news release.

Revised Long-Term Growth Targets

Campbell is revising its long-term targets to reflect the current conditions in the food industry. The company’s new long-term target for organic sales growth is 1 to 3 percent, compared to the previous target of 3 to 4 percent. Long-term earnings growth targets, which now exclude currency translation, remain unchanged with adjusted EBIT growing 4 to 6 percent and adjusted EPS growing 5 to 7 percent.

Campbell plans to provide fiscal 2016 guidance for net sales, adjusted EBIT and adjusted EPS when it reports fourth-quarter fiscal 2015 results Sept. 3, 2015.

A webcast of the meeting will be available at investor.campbellsoupcompany.com beginning at 12:30 p.m. Eastern Daylight Time today. A replay and transcript will be available after the event.

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