ORRVILLE, OHIO — Change is not new for The J.M. Smucker Co., which over its 120-year history has evolved numerous times to keep pace with consumers, said Mark T. Smucker, president and chief executive officer. To adapt to modern challenges in the marketplace, the Orrville-based company has developed a roadmap that defines a path to profitable growth over the next three years.
|Mark Smucker, president and c.e.o. of The J.M. Smucker Co.|
“Innovation will be critical,” Mr. Smucker said during a June 8 earnings call with financial analysts. “In fiscal 2017, our growth and innovation teams made great strides, bolstering our new product pipeline, which is now more robust than ever.”
Brands including Jif, Smucker’s Uncrustables, Sahale Snacks and Folgers will introduce new products in the coming years. Recent examples of on-trend innovation include Dunkin’ Donuts cold brew and Folgers Simply Gourmet coffee, as well as high-protein and grain-free pet food offerings, Mr. Smucker said.
“While line extensions will play a role in our path to growth, our goal is to launch new platforms that extend the strength of our iconic brands to meet consumer needs,” Mr. Smucker said. “We will place increasing emphasis on key growth segments within existing and new categories and, thus, transform our portfolio over time.”
Consumer choices are being driven by several trends, Mr. Smucker said.
“Food increasingly needs to fit into nontraditional fast-paced schedules, providing instant fulfillment while also becoming more personalized to meet specific wellness and functional needs,” he said. “Consumers are unwilling to sacrifice convenience for quality. They demand both. Consumers recognize that enjoyment and indulgence are essential to a well-balanced life and won't feel guilty about occasionally choosing indulgent foods.
“And food continues to evoke strong emotions as consumers look for authentic brands with fewer but recognizable ingredients that help them nurture their own identity and connect with others.”
Once seen as a status symbol of wealth, brands today are viewed as a signal of one’s personal values, he added.
“Consumers today expect a lot from food,” Mr. Smucker said. “It has to deliver an enjoyable experience, connect them to people and communities, satisfy cravings, promote health and even define who they are.”
Acquisitions also will continue to play a part in future growth at Smucker, which on May 30 agreed to purchase the Wesson oil business from Conagra Brands, Inc. for approximately $285 million in cash.
“As demonstrated by our recently announced agreement to acquire the Wesson brand, bolt-on transactions provide opportunities to add top and bottom line growth where we benefit from our existing customers and channels, broader participation in existing categories or synergies in our supply chain and go-to-market infrastructure,” Mr. Smucker said.
Fiscal 2017 was a pivotal year in gearing up for future growth, he said.
“While top-line softness persisted throughout the year, both for the broader industry and our business, we were able to deliver near-term earnings growth by accelerating synergy delivery and managing budget and cost effectively,” he said.
Net income in the fiscal year ended April 30 was $592.3 million, equal to $5.11 per share on the common stock, which was down 14% from $688.7 million, or $5.77 per share, in the prior year. Adjusted earnings per share rose 7% over the year before, Mr. Smucker said.
Net sales for the full year were $7,392.3 million, down 5% from $7,811.2 million, reflecting weakness in coffee and pet food.
“Sales of Smucker's Uncrustables frozen sandwiches were up 10%; Café Bustelo coffee, up 13%; and Nature's Recipe pet food, up 8%, all for the full year,” Mr. Smucker said. “We drove value by investing in innovation, with products introduced in the past three years contributing 9% of 2017 net sales. This included further growth for prior-year product launches, such as Dunkin’ Donuts K-Cups and Jif snack bars.”
Fourth-quarter net income of $110.4 million, or 96c per share, was down 42% from $191 million, or $1.61. Net sales in the three-month period fell 1% to $1,783.8 million, down from $1,807.6 million.“As we began the new fiscal year, we are more confident than ever that our multidimensional strategy provides a clear path to sustainable long-term sales and earnings growth,” Mr. Smucker said.