The global manufacturer and marketer of high-quality foods and simple meals, Campbell Soup Company (CPB), have underlined a series of initiatives to enhance its supply chain efficiency and reduce overhead costs. Under its new restructuring plan, the company will make new investments, outsource and close some operations.
Campbell is expected to eliminate a total of approximately 770 positions across the organization by incurring total pre-tax costs of approximately $75.0 million. This represents about 4% of the company's global workforce of 18,400. The company is planning to cut jobs by the end of July 2011. These initiatives are expected to generate annual pre-tax savings of approximately $60.0 million in fiscal 2012 and $70.0 million in fiscal 2014.
The company has planned to invest approximately $40.0 million over a period of 18-months to automate packing operation at its biscuit plant in Virginia, Australia. The initiative will result in the elimination of approximately 190 positions.
Further, the company will shift its production facility of ready-to-serve soups from Paris, Texas to its existing facility in Napoleon, Ohio and Maxton, NC. Campbell' soups along with sauces and beverages will continue to be produced at its Paris production facility.
Moreover, the company has decided to close down its manufacturing facility in Marshall, Mich and start the production of 'Soup at hand' products at its Maxton plant.
Moreover, Campbell is going to eliminate approximately 130 positions at its headquarters in Camden. Additionally, in order to enhance merchandising effectiveness and provide coverage for its U.S. customers, the company will outsource a major portion of U.S. retail merchandising activities to its retail sales agent, Acosta Sales and Marketing. The initiative will result in the elimination of approximately 190 positions.
Likewise, Campbell is going to shut down its Russian operation completely, which will result in elimination of 50 jobs. Campbell is marketing packaged soup in China and Russia since 2007, and has learned that there is greater prospect in other emerging markets, such as China compared to Russia.
Campbell Soup is one of the world's leading manufacturers of convenience food products. Furthermore, a strong portfolio of well-established brands, including Campbell's, Erasco, Liebig, Pepperidge Farm, V8, Pace, Prego, Swanson and Arnott's offer a competitive edge to the company and strengths its well-established position in the market.
Moreover, management has been stimulating growth in the U.S. Soup, Sauces and Beverages business segment through investments in product quality, convenient packaging and introduction of new products. The company has also upgraded marketing efforts and improved retail execution. These initiatives will boost the company’s top-line growth.
However, the raw and packaging materials used in the company's business include tomato paste, grains, beef, poultry, vegetables, steel, glass, paper and resin. Many of these materials are subject to price fluctuations due to a number of factors. Rising commodity prices may undermine the company's future performance.
Above all, Campbell Soup operates in a highly competitive food industry and experiences worldwide competition in all of its principal products from such well-established rivals, such as General Mills Inc. (GIS), H. J. Heinz Company (HNZ) and Dole Foods Company Inc. (DOLE).
Currently, Campbell Soup currently has a Zacks #3 Rank, implying a short-term Hold rating on the stock. The company retains a long-term Neutral recommendation.
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