J.M. Smucker earnings rise 5% in quarter
August 20, 2010
by Eric Schroeder
ORRVILLE, OHIO — Earnings at the J.M. Smucker Co. rose 5% in the first quarter driven in part by volume gains in its Folgers and Dunkin’ Donuts brand coffee, Jif peanut butter, Hungry Jack pancake mixes and syrups, and beverages. Net income in the first quarter ended July 31 was $102,881,000, equal to 86c per share on the common stock, up from $98,063,000, or 83c per share, in the same period of fiscal 2010.
Sales for the quarter finished narrowly lower, easing to $1,047,312,000 from $1,051,526,000. J.M. Smucker said the impact of favorable foreign exchange rates and sales mix offset the impact of the potato business divestiture and an overall 3-percentage point decline in volume. The volume decline primarily was driven by the company’s oils and baking brands in the United States and Canada.
“We are off to a solid start for the fiscal year,” said Richard Smucker, executive chairman of the board and co-chief executive officer. “While we are in a challenging marketplace, our ability to successfully manage our way through is reflected in our consistent performance. Our business is solid, our brands are strong, and we continue to be well poised for the future.”
Operating profit within J.M. Smucker’s U.S. retail coffee business rose 1% to $111,882,000, up from $111,167,000 in the same period a year ago. Sales, meanwhile, increased 7% to $393,570,000.
“Segment volume increased 5% as increases in the Folgers brand contributed the majority of the increase and Dunkin’ Donuts coffee continued its double-digit growth,” J.M. Smucker said. “Coffee price increases, averaging 4%, were initiated during the first quarter of 2011, and also contributed modestly to the net sales increase.”
The U.S. retail consumer unit posted operating profit of $71,417,000, up 8% from $66,123,000 in the same period a year ago. Net sales for the quarter fell 4% to $279,275,000 from $291,002,000.
“Volume gains were realized in Jif peanut butter, Smucker’s Snack’n Waffles brand waffles, and Hungry Jack pancake mixes and syrups, offsetting volume declines in toppings,” the company said. “Fruit spread sales were up due to favorable mix, as volume was down slightly in the first quarter of 2011, compared to the first quarter of 2010, due to the timing of promotions that occurred in the first quarter last year, but are planned in the second quarter of the current year.”
Operating profit in the U.S. retail oils and baking market segment fell 12% to $22,587,000, down from $25,680,000. Sales also finished lower, easing 11% to $173,871,000 from $194,416,000. J.M. Smucker said net sales and volume declines were driven primarily by Pillsbury flour and baking mixes and Crisco oils “in a continuing competitive and promotional environment.”
Special markets operating profit rose 31% to $34,872,000 from $26,694,000. Sales edged only narrowly higher, rising to $200,596,000 from $199,897,000.
The company updated its outlook for the year. For fiscal 2011, net sales are expected to increase slightly ahead of the 3% growth indicated previously, primarily due to the impact of recent pricing actions. Income per diluted share, excluding merger and integration costs of 55c to 60c per diluted share, is expected to range between $4.50 and $4.60.