Categories Analysis, Consumer

How the COVID-19 pandemic benefited food processing companies this year

For the first quarter of 2021, Campbell expects net sales to grow 5-7% and adjusted EPS to increase 13-18%

The year 2020 saw the arrival of the COVID-19 pandemic which unexpectedly upended the world as we know it. The restrictions and shelter-in-place orders which came with the health crisis caused businesses to shut down operations and forced people to stay at home with limited freedom to go about their daily lives.

The pandemic brought about various changes in the lifestyles of people as they began to purchase and spend more online and also started to work from home. There were also changes in the entertainment and food habits of people. As they remained confined at home, people started to cook their own meals and they also spent more on snacks and easy-to-prepare food products. Here are three companies that benefited from this trend:

Campbell Soup

Campbell Soup Company (NYSE: CPB), which makes soups and snacks, recorded an 18% growth in net sales during the fourth quarter of 2020 along with a 50% increase in adjusted EPS. The company reported double-digit sales increases in both its segments. Campbell also increased household penetration across most of its key brands helped by more at-home meals and quick scratch cooking.

The Meals & Beverages segment saw a 28% growth in sales, reflecting gains in soups, beverages, pasta and sauces. Total soup sales rose 52%, with gains in condensed, ready-to-serve and broth. Soup household penetration increased 5% year-over-year. The Snacks segment witnessed an 11% growth in sales driven by strength in bakery products, cookies, crackers, pretzels, potato chips and other snacks.

For the first quarter of 2021, Campbell expects net sales to grow 5-7% and adjusted EPS to increase 13-18%.

General Mills

General Mills (NYSE: GIS), a producer of breakfast cereals and baking goods, witnessed a 9% increase in net sales and a 27% growth in adjusted EPS for the first quarter of 2021. The company delivered growth across all its segments except for the Convenience Stores & Foodservice division, which was hurt by the pandemic.

Around 85% of the company’s net sales come from at-home food while away-from-home food makes up the remaining 15%. During the quarter, General Mills delivered growth in meals and baking, cereal, Mexican Food, Haagen-Dazs ice cream, Yoki meals and snacks, seasoning products and dumplings across its geographic divisions.

General Mills expects at-home food demand to remain high in the second quarter of 2021 versus pre-pandemic levels.

Conagra Brands

Packaged foods company Conagra Brands Inc. (NYSE: CAG) delivered a 12% growth in net sales along with a 63% increase in adjusted EPS for the first quarter of 2021. Organic sales grew 15% and revenues increased across all segments barring Foodservice.

Retail sales rose nearly 13% driven by double-digit growth in snacks, staples and frozen. The frozen category grew 13.5% with double-digit increases in single-serve and multi-serve meals as well as plant-based meat alternatives. Snacks grew 14.6% in the quarter while in staples, retail sales increased 11.6% year-over-year.

For the second quarter of 2021, Conagra expects organic sales growth of 6-8% and adjusted EPS of $0.70-0.74.

Click here to read the full transcripts of these companies’ conference calls

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