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What Drove Campbell Soup’s Q2 Top Line?

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Sales exceed expectations

Campbell Soup (CPB) posted better-than-expected sales for the second quarter of fiscal 2019. Campbell Soup’s net sales of $2.71 billion jumped 24.4% on a YoY basis and surpassed analysts’ estimate. The acquisitions of Snyder’s-Lance and Pacific Foods contributed 26% to the top-line growth. However, organic sales remained flat as increased sales in the Global Biscuits and Snacks segment were offset by declines in the Campbell Fresh and Meals and Beverages segment.

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In comparison, the top line of the company’s peers also gained from their recent acquisitions. J.M. Smucker’s (SJM) recent acquisitions and divestitures contributed 5% to its top-line growth during the last reported quarter. Meanwhile, General Mills’ (GIS) acquisitions and divestitures added ~8% to its second-quarter net sales. The acquisition of RXBAR and Multipro contributed 8.2% to Kellogg’s (K) top-line growth rate during the last reported quarter.

Sales by segments

Net sales in the company’s Meals and Beverages segment rose 1% driven by a 4% contribution from its recent acquisition. However, organic sales decreased by 1% as growth in beverages was more than offset by lower sales in Canada as well as lower Plum and Prego sales.

Net sales in Global Biscuits and Snacks soared 76% YoY, reflecting the acquisition of Snyder’s-Lance. The segment’s organic sales increased 3%, driven by growth in Arnott’s biscuits, Pepperidge Farm fresh bakery products, and Goldfish crackers.

Campbell Fresh segment’s net sales decreased 7% on a YoY basis, reflecting declines in refrigerated soups, Bolthouse Farms refrigerated beverages, and Garden Fresh Gourmet.

Outlook

Management reaffirmed its outlook and expects fiscal 2019 sales to be in the range of $9.98 billion to $10.10 billion. Campbell Soup reported net sales of $8.69 billion in fiscal 2018. The YoY growth reflects benefits from its recent acquisitions of Pacific Foods and Snyder’s-Lance.

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