Food products maker J.M. Smucker Co. (SJM) Friday reported 17 percent rise in its second-quarter profit, benefited by higher sales and margins. Net sales grew 8 percent driven by acquisition of Sara Lee foodservice business and a favorable sales mix. The company said it is well-poised for the holiday season and another year of growth, and lifted its adjusted earnings per share outlook for fiscal 2013.
The company noted that consumers continue to respond positively to its actions including strengthened merchandising. Richard Smucker, chief executive officer stated, "Our long-term strategy continues to serve us well in consistently delivering results. Our iconic brands are trusted and have demonstrated their strength and resilience."
For the second quarter ended October 31, the company posted net income of $148.85 million or $1.36 per share, higher than $127.25 million or $1.12 per share reported last year.
Excluding special project costs, earnings for the recent quarter were $1.45 per share, while the company posted $1.29 per share in the year-ago quarter.
On average, 16 analysts polled by Thomson Reuters expected the company to earn $1.45 per share for the quarter. Analysts' estimates typically exclude special items.
Results for the period included operations of North American foodservice coffee and hot beverage business acquired from Sara Lee Corp. since the completion of the acquisition on January 3, 2012.
Operating margin improved to 15.2 percent from 14.0 percent a year earlier. U.S. Retail Coffee segment margins were 25.4 percent, up from 22.7 percent a year ago. Margins from International, Foodservice, and Natural Foods were 15 percent, compared to 13.9 percent last year.
Net sales for the quarter grew 8 percent to $1.63 billion, which also came in line with analysts' consensus estimates. The company attributed the rise in revenues to acquisition and favorable sales mix. Sara Lee foodservice business contributed $90.7 million to net sales.
Favorable sales mix was driven by volume growth in its coffee brands, including K-Cups, which are higher priced per pound, compared to other products within the company's portfolio.
Overall commodity costs were slightly lower during the quarter, but was mostly offset by lower overall net price realization.
For fiscal 2013, the company expects non-GAAP net income per share to be in the range of $5.12 to $5.22, excluding special project costs of nearly $0.40 per share. Earlier, the company forecast earnings in the range of $5.00 to $5.10 per share excluding special project costs.
Net sales for the fiscal are anticipated to increase about 7 percent, compared to 2012, including an incremental eight-month contribution from the Sara Lee foodservice business.
Analysts expect the company to report earnings of $5.19 per share, on revenues of $5.95 billion for fiscal 2013.
SJM closed Thursday's regular trading at $85.38 on the NYSE. In the pre-market activity, the shares are down 0.21 percent.
by RTT Staff Writer
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