Smucker earnings climb 3% in quarter

by Eric Schroeder
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ORRVILLE, OHIO — Boosted by acquisitions and price increases undertaken during the quarter, net income at J.M. Smucker Co. for the third quarter ended Oct. 31 rose 3% to $51,453,000, equal to 95c per share on the common stock. This compared with income of $50,166,000, or 88c per share, in the same period a year ago. The most recent quarter included merger and integration costs of $6,210,000, which compared with similar costs of $2,552,000 in the same period a year ago.

Sales for the quarter were $843,142,000, up 19% from $707,890,000 from the same quarter of the previous year. The company said the Carnation, Europe’s Best and Knott’s Berry Farm acquisitions contributed approximately $35.8 million in net sales during the quarter while the foreign exchange impact of the weakening Canadian dollar reduced net sales by about $8.2 million. Excluding acquisitions and foreign exchange, net sales rose about 15%, J.M. Smucker said.

While acquisitions were key to sales growth, the primary driver was the implementation of price increases put in place to offset rising costs. Volume gains also contributed, including in such brands as Smucker’s fruit spreads, Pillsbury baking mixes and frostings, Hungry Jack potatoes and pancakes, Eagle Brand sweetened condensed milk, and Crisco shortening and oils. Volume declines were limited to flour and industrial oils, the company said.

"The number of meals prepared and consumed at home, as recent market data indicate, continues to be trending upward in this challenging economic environment, and is currently at levels not seen since 1994," said Tim Smucker, chairman and co-chief executive officer. "Our brands are considered by many families to be essential items in an pantry, and we are well positioned to meet the needs of those consumers looking to do more for their families by enjoying meals together at home."

The U.S. Retail Market posted a profit of $98,960,000 in the second quarter, up 1% from $98,407,000. Sales in the retail market were $634,988,000, up 19% from $535,224,000 a year ago. Within the consumer strategic area, sales increased 16% for the quarter, led by gains in fruit spreads, Uncrustables and Hungry Jack products. Within the consumer oils and baking strategic business area, sales rose 21% primarily due to the impact of price increases.

The Special Markets unit posted profit of $26,451,000, up from $20,788,000. Sales in the segment were $208,154,000, up 21% from $172,666,000 last year. J.M. Smucker said sales in the Canada strategic business area were up 29%.

Net income at J.M. Smucker for the first six months ended Oct. 31 totaled $93,744,000, or $1.73 per share, up 3% from $90,927,000, or $1.60 per share, in the first six months of fiscal 2008. Net sales were $1,506,799,000, up 19% from $1,269,403,000.

Looking ahead to the second half of the year, J.M. Smucker reaffirmed its full-year earnings forecast of $3.45 to $3.50 per share and sales of $3.8 billion to $4 billion.

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