* Cuts full-year profit forecast to $5.55-$5.60/share vs
* Says now expects 2014 sales to fall 5 pct
* Third-quarter adjusted earnings $1.66/share vs est. $1.68
* Revenue slides 6 pct to $1.47 bln vs est. $1.53 bln
* Shares fall as much as 8.5 pct
By Maria Ajit Thomas
Feb 14 J.M. Smucker Co forecast
full-year results below analysts' estimates, citing increased
competition in its peanut butter business and a shift in
consumer preference away from artificially sweetened fruit
Shares of the maker of Jif peanut butter and Folgers coffee
fell as much as 8.5 percent on Friday, after the company also
reported weaker-than-expected quarterly results.
Smucker had signed longer-term peanut purchase contracts,
which meant that unlike rivals, the company did not benefit from
a drop in prices.
Smucker competes with companies such as Hormel Foods Corp
, owner of the Skippy peanut butter brand, and ConAgra
Foods Inc that owns the Peter Pan brand.
Morningstar Inc analyst Ken Perkins said Hormel Foods was
putting more energy behind the Skippy brand than Unilever Plc
used to, increasing the level of competition in the
peanut butter category.
"We anticipate this heightened level of competitive activity
will continue through the fourth quarter," Smucker's Chief
Operating Officer Vincent Byrd said on a conference call.
The company also said its fruit spreads business, mainly the
Better for You division of sugar-free and low-sugar products,
was hurt as consumers moved away from artificially sweetened
Sales for Smucker's fruit spreads and Jif peanut butter
declined 7 percent in the third quarter ended Jan. 31, with
volumes falling 2 percent and 1 percent, respectively.
"Clearly, consumers are more focused on health and
wellness," Perkins said, adding that Smucker would have to
adjust its brand positioning because of the shift.
Smucker said it now expected revenue to fall by 5 percent in
the year ending April, which translates to sales of about $5.60
billion. The company forecast a 2 percent decline in 2014 sales
Analysts were expecting full-year revenue of $5.78 billion,
according to Thomson Reuters I/B/E/S.
Smucker also cut its full-year adjusted earnings forecast to
$5.55-$5.60 per share from $5.72-$5.82, below the average
analyst estimate of $5.78 per share.
Last year, the company reduced list prices for most of its
packaged coffee sold in the United States to pass on the benefit
of lower commodity costs to customers.
Sales from Smucker's U.S. retail coffee business fell 8
percent in the third quarter. The division sells Folgers coffee
and supplies packaged coffee to Dunkin' Brands Group Inc's
Dunkin' Donuts outlets.
Volumes in the Folgers brand rose 4 percent and those in the
Dunkin' Donuts packaged coffee business increased 8 percent.
Orrville, Ohio-based Smucker's net income rose to $166.7
million, or $1.59 per share, in the quarter from $154.2 million,
or $1.42 per share, a year earlier.
Excluding items, Smucker earned $1.66 per share.
Revenue fell 6 percent to $1.47 billion.
Analysts on average had expected a profit of $1.68 per share
on revenue of $1.53 billion.
Smucker's shares were down 5.5 percent at $89.95 on Friday
on the New York Stock Exchange.