ORRVILLE, OHIO – Retailers such as Target Corp. and Walmart Inc. have implied recently the continual acceptance of price hikes by food and beverage companies to offset inflation is coming to an end. But executives with the J.M. Smucker Co. expressed confidence in their ability to raise prices, if necessary, in the months ahead.
“We have generally taken a majority of the pricing across our portfolio thus far in anticipation of our costs that we would incur this fiscal year,” said Mark T. Smucker, president and chief executive officer, during a June 7 conference call to discuss fiscal 2022 results. “There may be additional pricing actions that are required depending on costs and inputs and so forth.
“And our confidence derives from the fact that we continue to have very strong relationships with our retail customers and that we really approach any meaningful cost increases very judiciously and really work to partner with our customers and have very open dialogue as we move forward. So again, this is part of our business. It’s our job, and we want to manage through it in the most positive way possible. So, we remain confident.”
Mr. Smucker supported his argument by noting the company saw “elasticity coming in better than expected” during the fiscal year.
“That trend has continued,” he said. “We are modeling, going forward, some elasticity. We really are in categories that are pretty resilient and our offerings (in) those categories are focused on a variety of value propositions... So, we just feel that we’re very well positioned in this environment and just will continue to execute our strategy.”
Net income at J.M. Smucker in the year ended April 30 was $631.7 million, equal to $5.84 per share on the common stock, and down from fiscal 2021 when the company earned $876.3 million, or $7.79 per share.
Fiscal 2022 sales of $7.99 billion were flat compared with fiscal 2021 when sales were $8 billion.
In US Retail Pet Foods, Smucker’s largest business unit, sales fell slightly in fiscal 2022 to $2.76 billion from $2.84 billion the year before. Pet Food profit fell to $396 million from $487 million. Items affecting Pet Food performance included divestiture of Natural Balance and a private label dry pet food business.
US Retail Coffee sales rose during the year to $2.48 billion from $2.37 billion. Business unit profit was relatively flat, coming in at $738 million in fiscal 2022 and down from $769 million the year before.
“Coffee habits formed during the pandemic continue and at-home consumption remains elevated,” Mr. Smucker said. “At-home consumption now represents over 70% of all coffee drinking occasions, compared to two-thirds pre-pandemic. We are well positioned to benefit from these trends with a portfolio that provides consumers options ranging from value to premium offerings.”
US Retail Consumer Foods sales fell to $1.7 billion from $1.8 billion the year before. Business unit profit was $424 million, down from $473 million in fiscal 2021.
International and Away From Home unit sales rose to $1 billion from $948 million the year before. Segment profit ticked up to $142 million in fiscal 2022 from $124 million in fiscal 2021.
The company is guiding fiscal 2023 net sales will rise between 3.5% to 4.5% compared with fiscal 2022.
“This reflects benefits from higher net pricing actions across our portfolio, primarily to recover increased commodity and ingredient, and transportation and packaging costs,” said Tucker H. Marshall, chief financial officer. “Net sales growth also reflects increased volume/mix for the Uncrustables brand, and continued momentum in away from home channels.”
Full-year adjusted earnings per share are expected to be in a range of $7.85 to $8.25.Hanging over next year’s performance is the recent recall of Jif peanut butter. Mr. Marshall said the company is expecting a 90¢ unfavorable impact to adjusted earnings per share that includes estimated customer returns and refunds, unsaleable inventory, and fees and penalties related to the recall that will be partially offset by insurance proceeds.