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J. M. Smucker Q4 EPS Tops View, Sales Slide On Price Declines


J. M. Smucker Co. (SJM) Thursday reported a 25 percent increase in profit for the fourth quarter, helped by lower costs, even as sales slid from last year. Adjusted earnings topped Wall Street estimates. The company sees fiscal 2014 earnings in line with Street view.

Vince Byrd, COO, said, "Our fourth quarter results reflect the sustained momentum realized across our business, particularly in key categories such as coffee, peanut butter, and fruit spreads. Combining strong brand building, innovation, and productivity initiatives with an ability to quickly adapt to market conditions has created a platform for growth."

Net income climbed 25 percent to $130.34 million from $104.13 million in the previous year. Earnings per share rose to $1.22 from $0.93.

Excluding special projects costs, net income was $1.29 per share, while it totaled $1.10 per share last year. On average, 14 analysts polled by Thomson Reuters expected earnings per share of $1.15 for the quarter. Analysts' estimates typically exclude one-time items.

Net sales slid 1 percent to $1.34 billion from $1.36 billion in the previous year, primarily due to a 5 percent decrease in net price realization reflecting price declines taken earlier in the year, notably on coffee and peanut butter. Analysts expected revenues of $1.34 billion for the quarter.

Overall, volume grew 2 percent, driven by a 6 percent increase in U.S. Retail Coffee and a 4 percent growth in U.S. Retail Consumer Foods segment. Volume gains in Jif peanut butter, Folgers coffee and Pillsburyfrostings more than offset decreases in the flour brands, the Sara Lee foodservice business, and Crisco shortening.

U.S. Retail Coffee sales slid 1 percent to $535.5 million, while volume increased 6 percent. Since the fourth quarter of 2012, the company took two price declines of 6 percent each, effective May 2012 and February 2013.

U.S. Retail Consumer Foods sales were 5 percent higher at $485.7 million. According to the company, a 4 percent increase in segment volume and favorable sales mix offset overall lower net price realization.

Sales in International, Foodservice, and Natural Foods dropped 9 percent to $318.4 million, driven by volume and lower net price realization. Segment volume decreased 4 percent primarily due to declines in the Sara Lee foodservice business.

Cost of products sold fell 5 percent to $856.05 million while Cost of products sold - restructuring and merger and integration declined 43 percent to $3.96 million.

Effective tax rate fell to 32.1 percent from 36.5 percent in 2013 due to lower state income taxes.

For fiscal 2014, the company expects non-GAAP net income per share in the range of $5.65 to $5.75, excluding special project costs of around $0.20 per share.

Net sales are estimated to be comparable to $5.9 billion generated in 2013. The outlook reflects the full-year impact of price declines taken in 2013 and rationalization of previously discussed products, offset by net sales of Cumberland products and expected volume growth in key categories.

Wall Street looks for annual earnings of $5.73 per share on revenues of $6.00 billion.

SJM closed at $102.37 on Wednesday. The stock is up 0.1 percent in pre-market activity.

by RTTNews Staff Writer

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