Food products maker J.M. Smucker Co. (SJM: Quote) Friday reported 32 percent rise in third-quarter profit, reflecting higher sales driven by Sara Lee foodservice business acquisition and favorable sales mix. The results were also benefited by a decrease in special project costs. Adjusted earnings and revenues topped analysts' expectations. The company also lifted the lower end of its fiscal 2013 earnings outlook and said it sees sales growth of over 6 percent.
Richard Smucker,, chief executive officer of the company said, "Our strategy of generating growth through brand-building, innovation, acquisitions, and productivity initiatives made possible solid third quarter and year-to-date results. Our brands continue to demonstrate their strength and resilience."
The company noted that its quarterly sales were benefited by continued growth of its K-Cups, momentum in spreads business as well as initial contributions from acquisitions of Sara Lee foodservice business.
For the third quarter ended January 31, the company's net income increased to $154.17 million or $1.42 per share from $116.84 million or $1.03 per share reported last year.
Excluding special project costs, earnings were $1.47 per share for the recent quarter, while it totaled $1.22 per share last year. On average, 16 analysts polled by Thomson Reuters expected earnings per share of $1.39 for the quarter. Analysts' estimates typically exclude one-time items.
Results for the recent quarter included operations of the North American foodservice coffee and hot beverage business acquired from Sara Lee Corp., or Sara Lee foodservice business, since the completion of the acquisition on January 3, 2012.
Net sales for the quarter grew 6 percent to $1.56 billion, which also came above analysts' estimate of $1.55 billion. Net sales adjusted for non-comparable impact of acquisition, divestiture, and foreign exchange, improved 2 percent from a year ago. Sara Lee foodservice business contributed an incremental $59.7 million to net sales.
Gross margin improved to 34.4 percent from 31.7 percent in the preceding year.
Cost of products sold, including restructuring and merger and integration in the recent quarter was $1.17 million, significantly lower than $13.13 million a year earlier.
For fiscal 2013, J.M. Smucker now expects non-GAAP earnings per share to be in the range of $5.17 to $5.22, excluding special project costs of about $0.40 per share. Earlier, the company forecast earnings in the range of $5.12 to $5.22 per share, excluding special project costs. Analysts project annual earnings of $5.22 per share.
Net sales for the fiscal are expected to increase over 6 percent, including an incremental eight-month contribution from the Sara Lee foodservice business.
SJM closed Thursday's regular trading at $92.16 on the NYSE.
by RTT Staff Writer
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