Quarterly performance
Trends
Campbell’s Meals & Beverages segment witnessed a 16% decline in reported net sales and a 9% decline in organic net sales in Q4 compared to the year-ago period. This was caused by decreases in US retail products such as US soup, Prego pasta sauces and Pace Mexican sauces. US soup sales fell 21% compared to a 52% increase in the year-ago quarter. Organic net sales in this segment increased 10% compared to Q4 2019.
Sales in the Snacks segment fell 6% on a reported basis but inched up 1% on an organic basis, helped by volume gains in Goldfish crackers and salty snacks such as Snack Factory Pretzel Crisps, and Cape Cod potato chips. Organic net sales rose 7% versus Q4 2019.
Campbell saw elevated household penetration and repeat rates in both segments compared to pre-pandemic levels. The company is looking to roll out several new products in FY2022. Within the Pacific Foods business, Campbell plans to launch new plant-based products such as creamy oat milk soups and creamy plant-based protein broths.
Cost savings and stock repurchases
Campbell achieved cost savings of $25 million in Q4 under its multi-year cost savings program and $80 million for the full year of 2021. This brings the total savings to approx. $805 million to-date. The company remains on track to deliver annualized savings of $850 million by the end of FY2022.
Campbell also approved a $500 million stock repurchase plan, which is in addition to the $250 million share repurchase program announced last quarter. It replaces the previous program of $1.5 billion.
Outlook
Looking ahead into FY2022, Campbell will continue to lap the periods of high demand while facing pressure from increasing inflation. The company expects to partly offset these headwinds through pricing and productivity plans. The first quarter is expected to be the most difficult as pricing actions begin to take effect.
Campbell expects core inflation of high single digits for the year with a more noticeable impact in the latter half. The company expects to see a year-over-year improvement in EBIT margin during the second half of the year.
Click here to read the full transcript of Campbell Soup’s Q4 2021 earnings conference call