DOW JONES NEWSWIRES
J.M. Smucker Co. (SJM) said fiscal third-quarter net income
jumped 84% on the impact of November's acquisition of Folgers.
But the jam-and-jelly maker lowered its fiscal-year outlook,
citing pressure amid the recent recall of peanut products. Food
companies have issued recalls of products made with peanut butter
or peanut paste supplied by Peanut Corp. of America, the
manufacturer that's the subject of a Food and Drug Administration
salmonella outbreak investigation. Sales have been hurt has a
result.
None of Smucker's products were recalled, but the company said
it has seen an impact from others' efforts. As such, Smucker now
sees fiscal-year earnings, excluding items, of $3.15 to $3.30 and
revenue of $3.6 billion to $3.7 billion, down from its prior view
of $3.45 to $3.50 a share and $3.8 billion to $4 billion,
respectively.
Meanwhile, the company reported net income of $77.9 million, or
68 cents a share, for the quarter ended Jan. 31, up from $42.4
million, or 75 cents, a year earlier. Per-share results fell
because of the stock issued in the Folger's deal. Excluding
restructuring and merger costs, earnings rose to 88 cents from 79
cents.
Net sales soared 78% to $1.18 billion, with acquisitions,
including Folgers, contributing $491.7 million.
Analysts polled by Thomson Reuters had expected earnings of 87
cents a share on revenue of $1.22 billion.
Gross margin increased to 33.9% from 29.4%, helped by increased
prices. That and acquisitions have helped offset the impact of
higher marketing and food costs.
Smucker - which makes its eponymous jam, Jif peanut butter and
Crisco oils - has sought in recent years to expand by buying up a
series of food and consumer brands, many of which were dumped by
Smucker's much larger competitors.
Volumes rose in several categories, including Pillsbury baking
mixes and frostings and Hungry Jack pancakes, though they declined
in oils and flour. The peanut recall contributed to a "slight
decline" in volume overall, which is expected to continue.
Net sales in the U.S. retail market - its largest business -
rose 9% on the price increases.
The company in November acquired Procter & Gamble Co.'s (PG)
Folgers coffee business for $2.65 billion in a move that was
expected to nearly double its annual sales. The Folgers deal capped
off a string of acquisitions that included ConAgra Foods Inc.'s
(CAG) Knott's Berry Farm food brand.
Shares closed at $41.14 on Tuesday and there was no recent
premarket trading. The stock has rebounded about 10% from a
three-year low reached in November.
-By Shirleen Dorman, Dow Jones Newswires; 201-938-2310;
shirleen.dorman@dowjones.com