ORRVILLE, OHIO — While sales growth within the Hostess Brands business acquired by the J.M. Smucker Co. has been elusive for longer than a year, Smucker management remain upbeat on the business and its outlook.

Mark T. Smucker, president, chairman and chief executive officer, and Tucker H. Marshall, chief financial officer, commented on Hostess and its performance June 6 after releasing J.M. Smucker’s fourth-quarter results.

In its first full quarter under Smucker’s ownership, ended April 30, the Hostess business, now the Smucker Sweet Baked Snacks division, generated segment profit of $70.2 million and net sales of $337.2 million. Comparisons with year-earlier results were not provided “due to differences in reporting periods and certain financial measures under previous ownership.”

In a Form 10Q filed last year with the Securities and Exchange Commission, Hostess said its first-quarter operating income (period ended March 31, 2023) was $58.6 million and sales were $345.3 million.

Smucker acquired Hostess last November in a transaction valued at $5.6 billion.

Mark Smucker said management was “overall pleased” with the integration progress and marketplace performance “even though net sales and profit were slightly below our expectations.”

“The Hostess brand gained volume share in the quarter, and long-term snacking trends continue to be favorable, providing tailwinds for our business,” Smucker said. “We have exciting and significant opportunities to grow the brand, including a strong innovation pipeline, joint merchandising with our legacy brands, and expanded distribution leveraging our strength in retail and away-from-home channels. These opportunities continue to give us confidence in the business and its future contributions to our growth objectives, including anticipated net sales growth in fiscal year 2025. The integration is on-track and, with the majority of our cost synergy analysis and organization design completed, we were able to begin recognizing synergies in the quarter, which is earlier than originally anticipated. We continue to anticipate cost synergies of approximately $100 million to be achieved by the end of fiscal year 2026.”

In offering an update on corporate strategic priorities, Smucker cited goals related to the Hostess acquisition —a successful integration, including “alignment of systems and process” and generating targeted cost synergies. He also cited the importance of “nurturing a unified culture as we expand our organization.”

The company said the opening of a new sweet baked snacks backing plant in Arkadelphia, Ark., stood out among accomplishments in fiscal 2024.

“This new facility is dedicated to producing Hostess Donettes and supports future growth for the brand,” the company said.

The baking plant was under construction by Hostess when Smucker acquired the snack cake company and dates back more than two years when Hostess said it had acquired a facility in Arkansas and would spend between $120 million to $140 million to transform the 330,000-square-foot plant into a “bakery of the future.”

In June 2023, Hostess executives said the Arkansas plant, located 70 miles southwest of Little Rock, would provide the company with incremental capacity necessary to meet the company’s long-term sales targets and would also elevate the level of automation employed by Hostess.

For fiscal 2025, Smucker expects the Hostess brand to account for about 16% of company sales, about $1.4 billion, Marshall said. In its final full year as a publicly-traded company, the year ended Dec. 31, 2022, Hostess net revenues were $1.36 billion. In its final quarter as a publicly traded company, the period ended Sept. 30, 2023, net sales were $352.8 million.

Marshall was upbeat about Smucker’s ownership of Hostess.

“We’re still very pleased with the acquisition, not only strategically, but the way that it’s contributing to some of the near-term objectives that we have,” he said in response to questions from an investment analyst. “And as we see the pattern of growth over time, not only a little bit of stabilization and maybe restoration in the convenience channel, but our ongoing work with our traditional US retail partners to continue to support that portfolio and then continued opportunity and optimism around just revenue synergies in fiscal ‘25 and beyond. I think we’ll continue to be positive for the overall momentum of Hostess.”

Mark Smucker echoed, “We still remain really excited about the brand,” adding that the integration is going well and that sweet baked snacks are outperforming overall snacking.

For the full year ended April 30, net income at J.M. Smucker was $744 million, equal to $7.14 per share on the common stock, compared with a $91.3 million loss in fiscal 2023. Net sales were $8.18 billion, down 4% from $8.53 billion.

In the fourth quarter, net income was $241.1 million, equal to $2.31 per share, compared with a loss of $600.7 million in the same quarter a year earlier. The prior year fourth quarter included a $1.02 billion charge associated with the sale of pet food brands to Post Holdings. Adjusted earnings per share were up 11% for the full year and 1% in the fourth quarter.

During the most recent year, Smucker launched the Uncrustables brand in Canada, kicked off its first national marketing campaign, and continued work on its newest production facility, in McCalla, Ala.

“This expanded capacity will enable continued growth across all channels and growing the brand to approximately $1 billion in annual net sales by the end of fiscal year 2026,” Smucker said.

Ahead of the plant’s completion, costs associated with the facility weighed on Smucker financial results. In the fourth quarter, US Retail Frozen Handheld and Spreads operating profits were $95.8 million, down 7% from $103.4 million in the fourth quarter of fiscal 2024. Also weighing on profits was increased marketing expense and unfavorable volume/mix, partially offset by pricing.

For the full year operating profits were $434.1 million, up 23% from $352.6 million the year before. Fourth-quarter sales were $450.5 million, down slightly from $453.4 million in the last three months of fiscal 2023. Excluding the effects of the divestiture of the company’s Sahale Snacks business, sales rose 1%. Full-year sales were $1.82 billion, up 11% from $1.63 billion.

Sales of Uncrustables grew by more than $100 million in fiscal 2024, including 17% in the fourth quarter alone. In fiscal 2023, Uncrustables sales jumped 34%.

Mark Smucker said the marketing investment for Uncrustables as a national television and digital campaign will be aimed at driving “household penetration and trial.”

“There is a component that is in promotion and merchandising,” he said. “This is not price. But it is really to support Uncrustables down the frozen aisle to drive awareness and trial and ultimately household penetration.”

About $20 million of incremental spending will be directed to the Uncrustables effort, Marshall said.

Asked whether the company more generally was under pressure from customers to lower prices, Smucker called relationships with retailers proceeding on a “business as usual” basis, with regard to merchandising and promotions.

“We have not seen undue pressure to take additional pricing down because quite frankly, the cost basket just simply doesn’t justify that,” Smucker said.

For the new year, Smucker is forecasting net sales growth of 9.5% to 10.5% and adjusted earnings per share of $9.80 to $10.20. Hostess is expected to account for 9 percentage points of the growth, and adjusted for the acquisitions and divestitures, sales are projected to increase 1.5% to 2.5%.