Smucker’s Results Inline, Raises Guidance to Match Estimates

November 16, 2012 by Paul Ausick

Source: Thinkstock
The J.M. Smucker Co. (NYSE: SJM) reported second-quarter fiscal 2013 adjusted diluted earnings per share (EPS) of $1.45 and $1.63 billion in revenues before markets opened this morning. In the same period a year ago, the food processor reported EPS of $1.29 on revenue of $1.51 billion. Today’s results also compare to the Thomson Reuters consensus estimates for EPS of $1.45 and $1.63 billion in revenue.

On a GAAP basis, Smucker posted EPS of $1.36 compared with $1.12 a year ago. The excluded items include restructuring and merger-related items associated with the company’s acquisition of the Sara Lee foodservice business last year.

The company’s COO said:

Overall consumer spending appears to be on the upswing which is welcome news for the industry. The tactical adjustments we made to address market conditions are working. We have optimized price points, closed price gaps, and strengthened merchandising.

The company guided full-year adjusted EPS from a range of $5.00 to $5.10 to a new range of $5.12 to $5.22. The company also expects net sales to rise by 7% in the 2013 fiscal year. The current consensus estimate for full-year EPS is $5.19.

The company’s largest division, U.S. retail coffee, boosted sales by 1% year-over-year, but profits improved 13% and profit margin increased from 22.7% to 25.4%. The Sara Lee foodservice business created a 49% profit jump in Smucker’s international, foodservice and natural foods division. Sales in U.S. consumer foods were up 1%, but profits fell 4%.

Overall, gross margins fell by 40 basis points, from 33.8% to 33.4% year-over-year. Lower commodity costs, especially for coffee, were offset by lower realized prices. The profit growth in the coffee business due to more single-cup sales and strong sales of Folgers brand coffee and Dunkin’ Donuts packaged coffee, which the company sells under license from Dunkin’ Brands Group Inc. (NASDAQ: DNKN).

The rather flat quarterly results and noninspirational guidance is not likely to move Smucker’s stock price much today.

Shares are up about 0.1% in premarket trading, at $85.50 in a 52-week range of $70.50 to $87.81. Thomson Reuters had a consensus analyst price target of around $88.25 before today’s results were announced.

Paul Ausick