Campbell Soup(US:CPB)2022-09-21 16:00Sales and Revenue - The company reported consolidated net sales from continuing operations of approximately 47% from its five largest customers in 2022, with Wal-Mart Stores, Inc. accounting for about 22%[15]. - Net sales increased by 1% in 2022 to $8.562 billion, driven by inflation-related pricing and sales allowances, despite volume declines and the divestiture of the Plum baby food and snack business[74]. - Net sales for the year were $8,562 million, an increase from $8,476 million in the previous year, representing a growth of 1.01%[123]. - Meals & Beverages sales were $4.607 billion in 2022, a slight decrease from $4.621 billion in 2021, while Snacks sales increased to $3.955 billion from $3.855 billion[81]. - The company experienced lower net sales in the first half of 2022 due to supply constraints, while the second half saw volume declines due to inflation-driven pricing actions[72]. Costs and Expenses - In 2022, the company experienced significantly elevated commodity and supply chain costs, impacting production and distribution, with expectations of continued supply pressures and input cost inflation into 2023[14]. - Total costs and expenses increased to $7,399 million from $6,931 million, marking an increase of 6.73%[123]. - Labor shortages and increased turnover rates observed in 2022 have led to higher operational costs, including increased overtime and wage rates[38]. - The company is facing challenges in passing on cost increases to consumers, which may lead to reduced sales volume if consumers shift to lower-priced alternatives[34]. - Gross profit margin decreased to 30.7% in 2022 from 33.2% in the previous year, primarily due to higher cost inflation and unfavorable volume/mix[75]. Capital Expenditures and Investments - The company completed capital expenditures of $242 million in 2022 and plans to increase this to approximately $325 million in 2023, focusing on expanding cracker capacity and a new manufacturing line[18]. - Approximately $9 million of the $242 million capital expenditures in 2022 were for compliance with U.S. environmental laws, with an estimated $13 million planned for 2023[21]. - The company expects to incur approximately $735 million to $740 million in pre-tax costs associated with continuing operations through 2023[96]. - The company aims for targeted annualized cost savings of $1 billion by the end of 2025, with $850 million in synergies and run-rate cost savings achieved through 2022[72]. Employee and Workforce - The company had approximately 14,700 employees as of July 31, 2022, emphasizing its commitment to building a diverse and inclusive workforce[23]. - The company has implemented employee safety measures exceeding CDC and WHO guidelines to mitigate COVID-19 impacts on the workforce[35]. - The company recognized actuarial losses on pension and postretirement plans amounting to $44 million in 2022, compared to gains of $203 million in 2021[76]. Market and Competition - The company faces significant competition in the food and beverage industry, particularly in North America, which may lead to lower sales and margins[47]. - The ongoing COVID-19 pandemic has resulted in changes in consumer behavior, impacting sales and inventory levels across the industry[36]. - The company anticipates continued elevated consumer demand for food at home, driven by changes in consumer behavior from the COVID-19 pandemic[72]. Legal and Regulatory Risks - The company is exposed to risks from legal and regulatory proceedings, particularly related to food marketing and safety, which could adversely affect financial results[53]. - The company has agreed to indemnify the buyer of the Plum business for certain claims related to heavy metals in products manufactured prior to the sale[151]. Financial Performance - Earnings from continuing operations were $757 million ($2.51 per share) in 2022, down from $1.008 billion ($3.30 per share) in 2021, reflecting lower gross profit and higher administrative expenses[78]. - The effective tax rate decreased, contributing to improved earnings per share despite lower overall earnings[78]. - The company reported net earnings of $757 million, down from $1,002 million, a decrease of 24.4%[123]. Supply Chain and Operational Challenges - The company expects supply chain pressures to continue throughout 2023, influenced by various factors including climate change and geopolitical events[14]. - Disruptions in the supply chain due to factors like climate change, pandemics, and geopolitical conflicts could adversely affect production and distribution capabilities[35]. - The company faced challenges related to supply chain disruptions and inflation in raw materials, impacting overall performance[117]. Strategic Initiatives - The strategic plan focuses on four pillars: building a winning team, accelerating profitable growth, fueling investments with targeted cost savings, and delivering on the company's purpose[70]. - The company is pursuing cost productivity initiatives in procurement, manufacturing, and logistics to enhance operational efficiency[44]. - Strategic acquisitions and divestitures are part of the company's growth strategy, but risks include integration challenges and potential loss of key personnel[45]. Intellectual Property and Brand Management - The company relies heavily on its intellectual property rights, and any failure to protect these rights could diminish brand value and competitiveness[40]. - The company owned over 2,800 trademark registrations and applications in over 150 countries as of September 14, 2022, highlighting the importance of brand protection[16].