The Consumer Analyst Group of New York (CAGNY) hosted multiple food and beverage sector companies Wednesday at a virtual conference, which continues through Friday.vHere is a summary of key highlights from each company.
Kellogg: 'Right On Schedule'
Kellogg Company (NYSE: K) was first to present at the annual CAGNY event on Wednesday. Kellogg CEO Steven Cahillane delivered a presentation focusing on what has and hasn't changed since last year's event.
Kellogg said last year it expected 2020 to be highlighted by top-line growth, profit margin expansion and a continued focus on initiatives to sustain incremental growth moving forward.
"And in 2020, we did just that," the CEO said. "We returned to balanced financial delivery right on schedule."
J.M. Smucker: Cost Savings Program
J M Smucker Co (NYSE: SJM) is targeting $50 million in annual cost reductions in fiscal 2022 through 2024, J.M. Smucker President and CEO Mark Smucker said in his presentation.
This will be achieved through a combination of minimizing discretionary expenses, reducing non-working marketing initiatives, optimizing the supply chain and restructuring the corporate structure.
Management plans on splitting its capital deployment evenly between investing in growth and returning cash to shareholders.
The company also guided to free cash flow generation of $975 million to $1.025 billion in fiscal 2021 and a long-term goal of $1 billion annually.
International Flavors & Fragrances: Long-Term Outlook
International Flavors & Fragrances Inc (NYSE: IFF) is a producer of flavors, fragrances and cosmetic actives. The company's presentation focused in part on its long-term financial outlook.
IFF guided to: organic sales growth of 4% to 5%, EBITDA margins of around 26% in 2023, free cash flow generation of around $2 billion in 2023 and net debt to EBITDA ratio of less than three times within 24 to 36 months once the acquisition of DuPont's Nutrition & Biosciences is complete.
Nomad Foods: Superior Growth
Nomad Foods Ltd (NYSE: NOMD), a specialty UK-based frozen food company, said in its presentation it is one of the very few food companies that delivered sustained annual organic revenue growth from 2017 through 2020. The company's total shareholder return since 2017 of 174% ranks supreme among its peers with McCormick & Company, Incorporated (NYSE: MKC), ranked second at 103%.
Management's new 2021 guidance consists of 3% to 5% revenue growth, 1% to 2% organic revenue growth and 11% to 15% adjusted EPS growth.
PepsiCo: Targeting Growth In The $1 Trillion Market
PepsiCo, Inc. (NASDAQ: PEP) has delivered a 4% average organic revenue growth since 2013, which is at the low-end of management's long-term target of 4% to 6% growth, the company said in its presentation.
The company's recent investments to deliver superior growth is based on a combination of growing its core brands (i.e., Pepsi, Gatorade), innovating in consumer-centric categories (Bubly Sparkling Water, 3D Doritos) and addressing strategic gaps (SodaStream, Muscle Milk Protein).
PepsiCo estimates the global beverages opportunity at around $570 billion and the company estimates its market share at 9%. The global snacks market stands at around $550 billion and the company estimates its share at 7%.
Performance Food Group: Optimistic As COVID-19 Pandemic Wanes, Business Will Build
Performance Food Group Co (NYSE: PFGC) is a foodservice distribution leader that delivers more than 200,000 products to clients across the U.S.
The company moved quickly in the early stages of the COVID-19 pandemic to raise capital as part of a strategy that is "one-third defensive, two-third defensive," CFO Jim Hope said in the presentation.
"At this point in time, we are increasingly optimistic that the pandemic's impact on the economy will wane over the next several months," the executive said. "As a result, we believe the need for our defensive positioning will reduce and the liquidity can be used for business-building activities."
Hershey: Better-For-You Snacks And Growth Plans
Hershey Co (NYSE: HSY) detailed a longer-term focus on expanding its portfolio to include more options with reduced sugar and/or includes organic and plant-based alternatives. The iconic company will simultaneously focus on building its existing products.
Part of the growth strategy will focus on acquisitions that satisfy three criteria, including: 1) exposure to incremental consumers or occasions, 2) a company that offers high margins with strong growth prospects, and 3) preference to be EPS accretive within one to two years.
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