Jelly and coffee maker J. M. Smucker Co. (SJM) on Thursday reported a 3 percent decline in profit for the third quarter, hurt by restructuring charges that offset higher revenues. Excluding items, adjusted earnings per share increased from last year. Looking ahead, the company lifted the low end of its earnings outlook range for fiscal year 2011.
The owner of Smucker's, Folgers and Pillsbury brands said its net income for the third quarter was $132.0 million or $1.11 per share, down from $135.5 million or $1.14 per share a year ago.
The latest quarter's results include restructuring and merger and integration costs of $0.16 per share, higher than costs of $0.03 per share last year.
Excluding items, adjusted earnings per share increased to $1.27 from $1.17 in the year-ago period. On average, twelve analysts polled by Thomson Reuters expected the company to report earnings of $1.26 per share. Analysts' estimates typically exclude special items.
Net sales grew 9 percent to $1.31 billion from $1.21 billion in the year-ago period. Excluding the impact of the potato products divestiture in the fourth quarter of 2010 and foreign exchange, net sales rose 10 percent. Analysts had a consensus revenue estimate of $1.25 billion.
The sales results reflect a 3 percent increase in overall volume, reflecting strong gains realized in Crisco oils, Jif peanut butter, Smucker's fruit spreads, Dunkin' Donuts packaged coffee, and natural foods beverages.
Meanwhile, the net impact of pricing contributed about 4 percent to net sales and the overall impact of sales mix was favorable. Early last month, JM Smucker increased the list price for majority of its coffee products by about 10 percent on an average, primarily consisting of the Folgers and Dunkin' Donuts brand names, citing green coffee costs.
Gross profit margin was 36.1 percent, down from 38 percent in the prior-year period, reflecting coffee price increases and price decline taken on oils in the second quarter.
For fiscal year 2011, Smucker lifted the lower end of its earnings outlook. The company now forecasts adjusted net income in a range of $4.60-$4.65 per share, including the impact of third-quarter impairment charges of $0.10 per share, but excluding special project costs of $0.65 to $0.70 per share.
Previously, the earnings outlook range was $4.55-$4.65 per share, excluding special project costs of $0.70 to $0.75 per share. Analysts expect the company to earn $4.67 per share for the year.
The company now projects full-year net sales to increase 4 percent compared to the prior year. Earlier, the company expected sales to increase in excess of 3 percent.
SJM closed Wednesday's regular trade at $63.95, up $1.04 or 1.65 percent on 0.93 million shares. For the past year, the stock has traded in a range of $53.27-$64.89.
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