Understanding Campbell Soup's Performance and Projections for FY2024

Campbell Soup Company’s Performance in Q2 2024

Shares of Campbell Soup Company (NYSE: CPB) were down over 2% on Thursday. The stock has dropped 19% over the past 12 months. For its second quarter of 2024, the company delivered lower sales and flat earnings, which managed to surpass expectations. It reaffirmed its outlook for the full year of 2024, anticipating continued sequential improvement in its top and bottom line.

Sales and profitability

• In Q2 2024, Campbell’s net sales decreased by 1% year-over-year to $2.5 billion.
• Organic sales dropped by 1%, lapping a 13% increase in the prior-year quarter.
• The top line benefited from net price realization of 1%, but this was offset by volume/mix, which was down 2% versus last year.
• Campbell anticipates a modest sequential improvement in its top line through the remainder of FY2024. It expects to see flat to low single-digit organic sales growth in the third quarter, with continued sequential improvement in the fourth quarter.
• Adjusted EPS of $0.80 remained flat in Q2 2024 compared to last year. Gross margin improved to 31.6% from 30.5% last year.

Segment performance

• In Q2, net sales in the Meals & Beverages segment declined 2% to $1.4 billion.
• The decrease was primarily driven by declines in US soup, beverages, and Pace Mexican sauces.
• US soup sales were down 3%, primarily due to a drop in sales of ready-to-serve and condensed soups.
• The company remains optimistic about the growth and margin trajectory of this business and sees strength in condensed cooking and broth portfolios.

During the second half of 2024, Campbell expects earnings growth and margin progress, especially in the fourth quarter, fueled by improvements in volume and mix, moderate inflation levels, and productivity enhancements. It is optimistic about its ready-to-serve soup offerings and core portfolio in the Snacks segment.