EPS of $-0.01 decreased by 101.5% from previous year
Gross margin of 29.4%
Net income of -3.00M
"Not disclosed in provided data." -
Campbell Soup Company (0HST.L) QQ4 2024 Results Analysis: Revenue Decline Amid Margin Pressure and Leverage Challenges in Packaged Foods
Executive Summary
Campbell Soup Company reported QQ4 2024 revenue of $2.293 billion with a gross profit of $675 million and an operating income of $77 million, yielding an operating margin of 3.36% and a gross margin of 29.4%. Net income was negative by $3 million, resulting in a basic EPS of -$0.01 for the quarter. The results reflect pronounced margin pressure and a material year-over-year (YoY) and quarter-over-quarter (QoQ) deterioration in profitability. Key drivers include elevated input costs and a challenging operating backdrop that weighed on earnings despite a constructive cash-flow profile. Net debt stood at approximately $7.43 billion, and liquidity remains constrained with a current ratio of 0.61 and a quick ratio of 0.23, underscoring near-term liquidity pressure despite positive operating cash flow of $288 million and free cash flow of $147 million for the period. The company generated $288 million of operating cash flow, invested $141 million in capex, and returned $23 million to shareholders through net equity actions (issuances and repurchases) while paying $111 million in dividends. The enterprise continues to rely on a heavy debt burden relative to equity (debt-to-capitalization ~0.67; debt ratio ~0.50) and shows limited liquidity headroom, suggesting financial flexibility remains tethered to continued operating performance and possible optimization of working capital and portfolio efficiency. Management commentary available in the earnings call (not provided in the supplied transcript) is expected to emphasize cost controls, pricing actions, and portfolio optimization as levers to restore margins and deleverage progressively. Overall, the QQ4 results imply a cautious near-term investment stance with attention to balance sheet repair, margin recovery, and sustained cash generation.
Key Performance Indicators
Revenue
2.29B
QoQ: -3.21% | YoY:-6.64%
Gross Profit
675.00M
29.44% margin
QoQ: -7.79% | YoY:-10.83%
Operating Income
77.00M
QoQ: -68.95% | YoY:-78.00%
Net Income
-3.00M
QoQ: -102.26% | YoY:-101.48%
EPS
-0.01
QoQ: -102.22% | YoY:-101.47%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $2.293 billion; YoY change: -6.64%; QoQ change: -3.21%. The quarter shows a continued step-down from prior periods, reflecting ongoing pressure on top-line growth.
Revenue and profitability trend highlights for QQ4 2024 (USD):
- Revenue: $2.293 billion; YoY change: -6.64%; QoQ change: -3.21%. The quarter shows a continued step-down from prior periods, reflecting ongoing pressure on top-line growth.
- Gross Profit: $675 million; YoY change: -10.83%; QoQ change: -7.79%. Gross margin: 29.44% (0.2944), indicating margin compression versus historical levels amid input-cost dynamics.
- Operating Income: $77 million; YoY change: -78.00%; QoQ change: -68.95%. Operating margin: 3.36% (0.0336). Significant dispersion between revenue and controllable costs suggests limited leverage from volume/mix in the quarter.
- Net Income: -$3 million; YoY change: -101.48%; QoQ change: -102.26%. Net margin: -0.13% ( -0.0013 ).EPS: -$0.01 (diluted -$0.01).
Additional context and efficiency indicators:
- EBITDA: $190 million; EBITDA margin: 8.26% (190/2293).
- Interest expense: $84 million; Depreciation & amortization: $113 million; Total operating expense: $2,035 million.
- Free cash flow (FCF): $147 million; Operating cash flow: $288 million; capex: $141 million.
- Cash and equivalents: $108 million; Net debt: ~$7.43 billion; Total debt: ~$7.54 billion; Cash-to-debt dynamics remain modest.
- Balance sheet health: Total assets $15.235B; Total liabilities $11.439B; Total stockholders’ equity $3.794B. Goodwill and intangible assets total $9.793B, with total intangible assets $4.716B and goodwill $5.078B, indicating a sizable non-cash asset base.
- Leverage and liquidity: Current ratio 0.612x; Quick ratio 0.225x; Cash ratio 0.030x. Debt-to-capitalization 0.665x; Debt ratio 0.495x; Interest coverage 0.92x. These metrics point to constrained near-term liquidity and a heavy leverage load that will require earnings to stabilize and cash flow to delever.
- Shareholder returns: Dividends paid $111 million; net stock repurchased $21 million; net equity activity for the period was modest, with a $2 million common stock issuance.
- Productivity and turnover metrics: Receivables turnover 3.64x; Inventory turnover 1.17x; Day metrics – DSO ~24.7 days, DIO ~77.1 days, DPO ~72.9 days; CCC ~101.8 days. Asset turnover 0.151x; Fixed asset turnover 0.757x. These figures suggest relatively modest asset efficiency and conservative working-capital management in a low-margin business.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.29B
-6.64%
-3.21%
Gross Profit
675.00M
-10.83%
-7.79%
Operating Income
77.00M
-78.00%
-68.95%
Net Income
-3.00M
-101.48%
-102.26%
EPS
-0.01
-101.47%
-102.22%
Key Financial Ratios
currentRatio
0.61
grossProfitMargin
29.4%
operatingProfitMargin
3.36%
netProfitMargin
-0.13%
returnOnAssets
-0.02%
returnOnEquity
-0.08%
debtEquityRatio
1.99
operatingCashFlowPerShare
$1.32
freeCashFlowPerShare
$0.67
dividendPayoutRatio
-3700%
priceToBookRatio
2.71
priceEarningsRatio
-856.16
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Earnings call transcript not provided in the supplied data. As a result, key management themes and quotes from the post-results discussion could not be incorporated. The analysis herein relies on the disclosed quarterly numbers and disclosed ratios. If a transcript becomes available, the highlights would likely center on: (1) margin recovery initiatives (pricing, cost savings, mix shift), (2) capital allocation stance (deleveraging vs. shareholder returns), (3) category resilience and portfolio optimization (Meals, Beverages, Snacks), and (4) progress on cost-reduction programs and supply-chain stability. Notwithstanding, absent direct quotes, the emphasis for investors should be on the bridge from current quarter profitability to sustainable cash generation and debt reduction.
Not disclosed in provided data.
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Not disclosed in provided data.
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Forward Guidance
No explicit forward guidance was included in the provided data. Given the QQ4 2024 results, investors should monitor two primary catalysts:
- Margin recovery trajectory: Management commentary (when available) is expected to address pricing actions, cost-savings initiatives, and mix optimization to restore gross and operating margins toward mid-single digits. The sensitivity of earnings to input costs suggests ongoing emphasis on procurement and productivity programs.
- Balance-sheet repair and cash flow discipline: With a high net debt level and constrained liquidity (current ratio ~0.61), the path to deleveraging will matter. Watch for capital allocation decisions (dividend policy, share repurchases, and any strategic divestitures or asset-light moves) and any updates to long-term debt maturities and refinancing options.
Industry conditions, including commodity price volatility and consumer demand for familiar packaged-food brands, will influence the feasibility and timing of management’s targets. Indicators investors should monitor include quarterly margin progression, progress on supply-chain efficiency, working-capital changes, and any new cost-control or SKU rationalization programs.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0HST.L Focus
29.44%
3.36%
-0.08%
-856.16%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Balanced cautious stance. The QQ4 results display meaningful margin headwinds and a heavy debt burden that constrain near-term profitability and flexibility. However, the company remains capable of generating positive operating cash flow and free cash flow, which supports deleveraging over time and potential strategic investments. The key to an improved investment thesis will be a clear path to sustained margin expansion (through pricing, procurement, and efficiency) and a demonstrable reduction in net debt. If management lays out a credible plan for deleveraging within a 2–3 year horizon, with evidence of margin recovery and disciplined capital allocation (favoring cash flow preservation and selective returns), the stock could see a more constructive outlook. In the meantime, investors should monitor run-rate margins, working-capital evolution, and the cadence of debt repayments and refinancing activity.
Key Investment Factors
Growth Potential
Brand breadth and portfolio breadth across Meals, Beverages, and Snacks offer multiple revenue channels (retail, foodservice, and e-commerce). Potential upside includes: targeted pricing actions to offset input cost inflation, expansion of high-margin snacks and ready-to-serve products, and international opportunities (where margins may differ from North America). Accretive product launches and category leadership in Pepperidge Farm and Campbell's Ready-to-Serve lines could support volume stabilization and mix benefits over time.
Profitability Risk
Key risks include ongoing input-cost pressures and inflation, currency exposure (given geographic breadth), a heavy leverage burden limiting financial flexibility, and a relatively low current liquidity position. The company operates in a highly competitive space with price sensitivity and macro headwinds that can pressure volumes. Also, the significant goodwill and intangible assets imply sensitivity to impairment risk should operating performance deteriorate.
Financial Position
Balance-sheet stress is evident from elevated net debt (~$7.43B) and weak liquidity ratios (current 0.61x, quick 0.23x). The margin framework is weak (operating margin ~3.4%), underscoring a need for margin expansion to sustain deleveraging and capital allocation priorities. Nonetheless, positive operating cash flow ($288M) and modest free cash flow ($147M) provide a runway for debt reduction and potential strategic investments.
SWOT Analysis
Strengths
Diversified brand portfolio across core consumer staples with broad distribution.
Positive free cash flow generation (FCF $147M) and solid operating cash flow ($288M) in QQ4 2024.
Established market presence in North America with iconic brands (e.g., Campbell’s soups, Pepperidge Farm).
Ability to allocate capital to shareholders via dividends and selective buybacks.
Weaknesses
Material leverage (debt-to-capitalization ~0.67) and weakened liquidity position.
Low operating and net margins (operating margin ~3.36%, net margin ~-0.13%).
Significant goodwill and intangible asset base implying impairment risk under stress.
Limited near-term financial flexibility due to high debt and modest cash balance.
Opportunities
Pricing actions and cost-reduction programs to restore margins.
Volume stabilization through portfolio optimization and growth in higher-margin snacks.
Expansion into adjacent markets and improved e-commerce penetration.
Threats
Commodity cost volatility and input inflation impacting margin.
Competitive pressure and price sensitivity in staple foods.
Economic slowdown and currency effects potentially compressing consumer spend.