EPS of $0.22 decreased by 51.1% from previous year
Gross margin of 29.4%
Net income of 66.00M
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Campbell Soup Company (0HST.L) QQ3 2025 Results Analysis – Mixed Growth in a Defensive Packaged Foods Franchise with Margin and Leverage Headwinds
Executive Summary
Campbell Soup Company’s QQ3 2025 (quarter ended around 2025-04-27 per filing data) delivered a modest year-over-year revenue uptick but showed meaningful near-term profitability and leverage challenges. Revenue reached $2.475 billion, up 4.5% vs. the prior year, yet quarter-on-quarter performance deteriorated 7.8% from the immediate prior quarter. Gross margin was 29.4% (down slightly YoY), and operating margin stood at 12.4%, aided by ongoing cost controls but pressured by higher 'other' expenses and a heavy financing footprint that dampened net income. Net income was $66 million, translating to $0.22 per share, down about 50% year-over-year and roughly 62% quarter-over-quarter. Free cash flow was positive at $135 million, but cash declined to $143 million by quarter end as aggressive debt service (debt repayments of $792 million) and dividends contributed to substantial net cash outflow of ~$686 million during the period. The balance sheet shows a highly leveraged profile with total debt of $6.90 billion and net debt of $6.75 billion against equity of $3.87 billion, signaling a meaningful leverage burden even as operating cash flow generation remains intact. Management commentary (where available) is expected to emphasize portfolio optimization (notably within Snacks via Pepperidge Farm and related brands), price/mix discipline, and ongoing cost-reduction initiatives as keys to margin recovery. The near-term outlook hinges on improving top-line growth in a competitive consumer staples environment, successful deleveraging, and targeted efficiency programs to stabilize profitability while preserving Campbell’s defensible position in soups, beverages, and premium snacks.
- Revenue: $2.475B; YoY +4.47%; QoQ -7.82%
- Gross Profit: $728.0M; Gross Margin 29.41%; YoY -0.55%; QoQ -11.11%
- Operating Income: $308.0M; Operating Margin 12.44%; YoY +24.19%; QoQ -5.81%
- Net Income: $66.0M; Net Margin 2.67%; YoY -50.38%; QoQ -61.85%
- EPS: $0.22; Diluted $0.22; YoY -51.11%; QoQ -62.07%
- Free Cash Flow: $135.0M; Operating Cash Flow: $135.0M;
- Cash at End of Period: $143M (vs. $829M at start);
- Net Debt: $6.753B; Total Debt: $6.896B; Equity: $3.87B
- Cash Flow from Financing: -$915M; Debt Repayment: -$792M; Dividends Paid: -$116M; Share repurchases: -$4M
- Balance Sheet: Total Assets $14.828B; Total Liabilities $10.956B; Goodwill $9.951B; Intangibles $4.366B; Current Assets $2.226B; Current Liabilities $2.849B
- Ratios provided include gross margin 29.41%, operating margin 12.44%, pre-tax margin 3.27%, net margin 2.67%, and EBITDA margin 11.11%, with an EBITDAR of 11.11%.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.48B
4.47%
-7.82%
Gross Profit
728.00M
-0.55%
-11.11%
Operating Income
308.00M
24.19%
-5.81%
Net Income
66.00M
-50.38%
-61.85%
EPS
0.22
-51.11%
-62.07%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript data for QQ3 2025 was not provided in the input. As a result, key management quotes and theme-based insights from the earnings call (e.g., strategy, operations, market conditions) could not be extracted. Once the transcript is supplied, a thematically organized highlights section will be added, with context and significance for each quote.
Transcript not provided in the data.
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Transcript not provided in the data.
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Forward Guidance
Based on the QQ3 2025 results and sector dynamics, Campbell Soup remains positioned as a defensible consumer staple with meaningful opportunities in Snacks and international replenishment. The near-term outlook hinges on three levers: (1) price realization and mix improvements to support margin recovery, (2) ongoing cost savings and productivity programs to offset input cost inflation and other operating expenses, and (3) selective capital allocation to deleverage the balance sheet while preserving cash flow for dividends and strategic buybacks. A plausible base case assumes low-to-mid single-digit revenue growth in the remainder of FY2025 with EBITDA margin stabilizing in the low-to-mid teens, absent material commodity shocks. The key catalysts are: price/mix optimization, success of Pepperidge Farm and other Snacks brands, international expansion, and sustained cost discipline. Critical factors for investors to monitor include: trajectory of net debt and interest burden, cash conversion cycle improvements, resilience of the Meals segment in the U.S. market, and the pace of deleveraging through operating cash flow and potential asset-light initiatives. Risks include volatile input costs, persistent macro pressure on discretionary consumer spend, supply chain disruptions, and competition-driven price competition in core shelves.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0HST.L Focus
29.41%
N/A
N/A
N/A
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Campbell Soup remains a defensible, cash-generative presence in the consumer staples space. The QQ3 2025 results show a mixed picture: revenue growth is positive YoY, but profitability is tempered by higher financing costs and non-operating expenses, and the balance sheet remains highly leveraged. The investment thesis hinges on successfully translating the Snacks portfolio and U.S. core strength into margin expansion through price/mix discipline and cost efficiency, while gradually reducing leverage via operating cash flow and prudent financing. If the company can stabilize gross margin around the low- to mid-30s (excluding unusual items) and sustain a mid-teens EBITDA margin with disciplined capital allocation, Campbell could deliver modest multiple expansion and attractive risk-adjusted returns for long-horizon investors. Near term, watch leverage trajectory, free cash flow conversion, and any management commentary on cost-saving initiatives, price realization, and international growth to assess the sustainability of the recovery path.
Key Investment Factors
Growth Potential
Growth potential rests on Snacks category expansion (e.g., Pepperidge Farm portfolio), price realization and favorable mix, and selective international growth. Improving operating efficiency and ongoing cost-reduction programs can bolster margins, supporting mid-to-high single-digit revenue growth and EBITDA margin stabilization over time.
Profitability Risk
Main risks include high leverage and interest expense weighing on net income, commodity and input cost volatility, price/mass-market pressure, currency fluctuations for international sales, and potential shifts in consumer demand toward private-label or lower-priced alternatives.
Financial Position
Despite steady operating cash flow, Campbell’s balance sheet reflects a high debt load with net debt of roughly $6.75B against equity of $3.87B. Near-term liquidity remains adequate but leverage remains a constraint on earnings power and financial flexibility. The company’s ability to deleverage through cash flow generation and disciplined capital allocation will be critical to sustaining investor confidence.
SWOT Analysis
Strengths
Diverse, recognizable brand portfolio across Meals, Beverages, and Snacks (e.g., Campbell’s soups, Swanson, Pepperidge Farm)
Defensive consumer sector positioning with steady demand base
Strong distribution network and scale in the U.S.
Visible free cash flow generation in a volatile macro environment
Strategic assets in the Snacks segment with premium brands
Weaknesses
High leverage and significant interest expense
Lower net margins (2.7% in QQ3 2025) vs. some peers
Reliance on U.S. market with exposure to inflationary pressures and input costs
Quarterly volatility in earnings due to other income/expenses and seasonality
Opportunities
Profitability uplift from price realization and mix improvements
Portfolio optimization and potential acceleration in Snacks growth (Pepperidge Farm)
International expansion to diversify geographic risk
Operational efficiency programs and SG&A optimization to lift margins
Threats
Rising commodity and packaging costs impacting COGS
Competitive pressure from large packaged-food incumbents and private-labels
Interest rate sensitivity and debt servicing burden limiting financial flexibility
Macro headwinds affecting consumer discretionary spend and dietary shifts