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UPDATE 3-JM Smucker Q4 beats; sees FY EPS ahead of Street view
June 17, 2010 / 11:47 AM / in 7 years

UPDATE 3-JM Smucker Q4 beats; sees FY EPS ahead of Street view

* Q4 adj EPS $0.99

* Q4 sales $1.07 bln vs est. $1.04 bln

* Sees adj FY EPS $4.50-$4.60 vs est $4.42

* Expects pricing pressure to persist in current fiscal yr

* Shares rise 7 pct (Recasts; adds comments from analyst and company executive, updates share movement)

By Abhishek Takle

BANGALORE, June 17 (Reuters) - J.M. Smucker Co (SJM.N) posted a better-than-expected quarterly profit, helped by strong peanut butter sales, and the maker of Jif peanut butter and Folgers coffee forecast strong full-year earnings, sending its shares up 7 percent.

The company also forecast sales to rise 3 percent, excluding acquisitions, due to pricing, better product mix and volume growth.

However, the company warned that it expects the strong promotional pricing environment, which it began to face earlier this year, to persist in the current fiscal.

“We’ve seen more pressure to offer deeper deals across the board and we’ve factored certainly some of that into our forecast for next year, but as the year goes on we’re just going to have to be responsive,” a company executive said on a conference call with analysts.

The biggest issue facing the company is that its major customer, Wal-Mart Stores Inc (WMT.N), is rolling back prices, Jefferies & Co analyst Scott Mushkin said.

“(Walmart is) selectively selling things at incredible discounts and it is posing some challenges and that is the biggest issue not only for Smucker but for the whole space,” said Mushkin, who calls Smucker his “core holding” in the consumables space.

A company executive said sales of Folgers coffee were being hurt by pricing rollbacks by “a very large customer.”

Smucker, which raised the list prices for the majority of its Folgers, Dunkin’ Donuts, Millstone and Folgers Gourmet Selections coffees in May, is also keeping a close eye on coffee prices, given the “historic highs” the commodity has touched in the past week.

The company expects to earn $4.50 a share to $4.60 a share for the year, ahead of expectations for earnings of $4.42 a share on sales of $4.75 billion.

Shares of Smucker were up 6 percent at $61.20 Thursday afternoon on the New York Stock Exchange.


For the quarter ended April 30, the company, which also sells Pillsbury flour and Crisco oils, said sales at its U.S. retail consumer segment rose 8 percent, excluding divestitures, while segment margins improved to 26.1 percent.

In contrast, its coffee retail business, which had driven earnings after the company acquired the Folgers packaged coffee business in November 2008, fell 1 percent, with a 4 percent decline in volume as the company lapped strong volumes last year.

Net earnings for the quarter were $120.6 million, or $1.01 a share, compared with $94.3 million, or 80 cents a share, last year.

Excluding items, the company earned 99 cents a share, handily beating analysts’ expectations for earnings of 80 cents a share.

Sales in the quarter came in flat at $1.07 billion, but still beat expectations for sales of $1.04 billion. (Reporting by Abhishek Takle in Bangalore; Editing by Jarshad Kakkrakandy, Anne Pallivathuckal)

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