An Overview of Campbell Soup Company's Fiscal 4Q15 Earnings
Fiscal 4Q15 performance highlights
Campbell Soup’s (CPB) sales decreased 9% to $1.693 billion, primarily due to the impact of one less reporting week for the quarter. Organic sales increased 1% from higher selling prices and lower promotional spending, partly offset by lower volume.
Campbell Soup’s gross margin increased from 34.1% to 36.1%, and its adjusted gross margin improved 1.8%. The increase in adjusted gross margin was due to productivity improvements, higher selling prices, and lower promotional spending. Input cost inflation also compensated for this increase.
Marketing and selling expenses decreased 7% to $176 million, primarily driven by lower marketing overhead and selling expenses. Increased advertising and consumer promotion expenses partly covered this decrease.
Administrative expenses increased 19% to $177 million, primarily driven by increased incentive compensation expense. It also included $13 million of costs related to the implementation of the new organizational structure and cost reduction initiatives.
Adjusted EBIT ( earnings before interest and tax ) increased 5% to $234 million, reflecting a higher gross margin percentage. Increased administrative expenses and the negative impact of currency translation covered this to some extent.
Net interest expense decreased $3 million to $27 million, and the tax rate dropped 1.1% to 32.7%. Excluding items impacting comparability, the adjusted tax rate increased 0.8% to 34.8%.
Fiscal 2015 key results
Campbell Soup’s sales decreased 2% to $8.08 billion. Higher selling prices and an increase in volume partially covered this decrease. Organic sales increased 1% with gains in four of the company’s five reportable segments. Adjusted EBIT decreased 2% to $1.219 billion, reflecting an adjusted gross margin decline of 0.7%. Higher volume gains and lower marketing costs covered the unfavorable impact of currency translation and higher incentive compensation expense.
Net interest expense decreased $14 million to $105 million, reflecting lower levels of debt. The tax rate fell 2.1% to 30.2%, and the adjusted tax rate decreased 0.8% to 31%. The decrease was primarily due to the favorable resolution of an intercompany pricing agreement between the US and Canada.
Campbell’s peer Bunge Limited (BG) reported a year-to-date return of -22.78%. In contrast, Campbell, JM Smucker (SJM), and Flowers Foods (FLO) reported positive year-to-date returns of 11.70%, 13.46%, and 25.69%, respectively. The Power Shares S&P 500 Low Volatility ETF (SPLV) invests 0.96% of its portfolio in SJM.