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Campbell's (CPB) Toronto Plant Closure to Boost Cost Savings
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Campbell Soup Company (CPB - Free Report) has decided to wind down its manufacturing facility in Toronto and integrate the Canadian soup and broth production to its three existing factories in the United States, namely, Paris, TX; Maxton, NC and Napoleon, OH. This action is in sync with the company’s cost-savings plan and is likely to bolster the operational efficiency of the North American thermal network.
The Toronto facility will be shut down in phases, within a period of about 18 months, resulting in 380 job cuts out of 600. Further, the Canadian headquarters and related commercial operations will be relocated to the Greater Toronto Area, with around 200 job positions. It will house a modern Food Innovation Center that will serve the community with soup and broth recipes, to suit Canadian tastes.
The decision to close this facility stems from the company’s recent review of manufacturing operations, which indicates that the plant is no longer competitively viable due to its age and size. This facility was opened in 1931 and happens to the company’s oldest plant in the thermal plant network.
As mentioned above, the winding down of the Toronto plant is in accordance with the company’s cost-savings plan, which was announced in fiscal 2015. Campbell has been progressing well with this initiative and anticipates cost savings worth $450 million by the end of fiscal 2020. Notably, the company generated savings of $20 million in first-quarter fiscal 2018, bringing the savings to $345 million as of Oct 29, 2017. Additionally, the company expects the cost savings program to deliver $60-$70 million of savings in fiscal 2018 that is incremental to the productivity gains from ongoing supply chain initiatives.
We believe that the company’s strategy of concentrating on supply chain efficiencies, along with curtailing costs and reinvesting part of these savings in areas with high growth potential is likely to drive growth.
Stock Performance
Campbell has lagged the industry in the past year due to dismal top and bottom-line trends in recent quarters. This Zacks Rank #3 (Hold) stock has lost 24% in a year, significantly wider than the industry’s decline of 1.8%.
Lamb Weston, with a long-term earnings growth rate of 12%, has pulled off an average positive earnings surprise of 7.9% in the trailing four quarters.
Sysco, with a long-term earnings growth rate of 9% has posted an average positive earnings surprise of 2.6% in the last four quarters. United Natural, with a long-term earnings growth rate of 6.2%, has delivered an average positive earnings surprise of 2.3% in the trailing four quarters.
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And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>
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Campbell's (CPB) Toronto Plant Closure to Boost Cost Savings
Campbell Soup Company (CPB - Free Report) has decided to wind down its manufacturing facility in Toronto and integrate the Canadian soup and broth production to its three existing factories in the United States, namely, Paris, TX; Maxton, NC and Napoleon, OH. This action is in sync with the company’s cost-savings plan and is likely to bolster the operational efficiency of the North American thermal network.
The Toronto facility will be shut down in phases, within a period of about 18 months, resulting in 380 job cuts out of 600. Further, the Canadian headquarters and related commercial operations will be relocated to the Greater Toronto Area, with around 200 job positions. It will house a modern Food Innovation Center that will serve the community with soup and broth recipes, to suit Canadian tastes.
The decision to close this facility stems from the company’s recent review of manufacturing operations, which indicates that the plant is no longer competitively viable due to its age and size. This facility was opened in 1931 and happens to the company’s oldest plant in the thermal plant network.
As mentioned above, the winding down of the Toronto plant is in accordance with the company’s cost-savings plan, which was announced in fiscal 2015. Campbell has been progressing well with this initiative and anticipates cost savings worth $450 million by the end of fiscal 2020. Notably, the company generated savings of $20 million in first-quarter fiscal 2018, bringing the savings to $345 million as of Oct 29, 2017. Additionally, the company expects the cost savings program to deliver $60-$70 million of savings in fiscal 2018 that is incremental to the productivity gains from ongoing supply chain initiatives.
We believe that the company’s strategy of concentrating on supply chain efficiencies, along with curtailing costs and reinvesting part of these savings in areas with high growth potential is likely to drive growth.
Stock Performance
Campbell has lagged the industry in the past year due to dismal top and bottom-line trends in recent quarters. This Zacks Rank #3 (Hold) stock has lost 24% in a year, significantly wider than the industry’s decline of 1.8%.
Interested in Food Stocks? Count on These
Better-ranked stocks in the industry include Lamb Weston Holdings, Inc. (LW - Free Report) , Sysco Corporation (SYY - Free Report) and United Natural Foods, Inc. (UNFI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lamb Weston, with a long-term earnings growth rate of 12%, has pulled off an average positive earnings surprise of 7.9% in the trailing four quarters.
Sysco, with a long-term earnings growth rate of 9% has posted an average positive earnings surprise of 2.6% in the last four quarters.
United Natural, with a long-term earnings growth rate of 6.2%, has delivered an average positive earnings surprise of 2.3% in the trailing four quarters.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>