Food products maker J.M. Smucker Co. (SJM: Quote) on Thursday said its fourth-quarter profit increased from a year ago and topped Wall Street estimates, as price increases and acquisitions helped offset the impact of lower volumes and higher commodity costs. However, the company's guidance for the ongoing fiscal year came in much below analysts' consensus.
The maker of Smucker's jams and Folgers coffee said the volume decline was generally in line with its expectation of continued weak consumer purchases, amid higher retail prices and a competitive environment.
Lower volumes in the base business squeezed gross margins, but the impact was mitigated by raising prices in response to higher commodity costs for green coffee and peanuts.
Fourth-quarter net income grew 10 percent to $104.13 million and earnings per share rose 13 percent to $0.93.
Adjusted earnings, which excluded restructuring and merger and integration costs, increased 10 percent to $1.10 per share. On average, 13 analysts polled by Thomson Reuters expected earnings per share of $0.99 for the quarter. Analysts' estimates typically exclude one-time items.
Net sales for the quarter increased 14 percent to $1.36 billion driven by acquisitions and higher realized prices and came in above analysts' consensus estimate of $1.35 billion.
Those acquisitions were that of Rowland Coffee Roasters, Inc. and the North American foodservice coffee and hot beverage business acquired from Sara Lee Corp. Excluding the impact of acquisitions and foreign exchange, net sales grew 5 percent.
Overall volume, excluding acquisitions, was down 7 percent primarily driven by Jif peanut butter, Pillsbury baking mixes and Folgers coffee.
Looking ahead, for fiscal year 2013, the company projects adjusted earnings of between $5.00 and $5.10 per share, higher than fiscal 2012 earnings of $4.73 per share, but much lower than analysts' current estimate of $5.23 per share.
Net sales are projected to increase nearly 7 percent from last year's $5.53 billion, including an incremental eight-month contribution from the Sara Lee foodservice business. Analysts expect sales of $5.83 billion for the full year.
Vince Byrd, President and Chief Operating Officer, said, "While higher food prices continue to pose a challenge to consumers, we believe that softening commodity costs should provide some relief to improve volume. In this economic environment, it is important to continue to build our brands for the long term while maintaining our ability to quickly adjust our marketing tactics to meet ever-changing consumer needs."
In pre-market, J.M. Smucker shares are currently trading at $76.56, up $0.51 or 0.67 percent.
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by RTT Staff Writer
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