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Smucker shares fall on lowered outlook

By Jim Mackinnon
Beacon Journal business writer

Shares in coffee, jam and peanut-butter maker J.M. Smucker Co. fell sharply Wednesday after the Orrville company missed earnings estimates and lowered its revenue outlook for fiscal 2014.

Smucker reported earning $153.4 million, or $1.46 a share, on revenue of $1.56 billion for the second quarter of fiscal 2014. Net income was up from $148.8 million, or $1.36 a share a year ago while revenue was down from $1.63 billion.

Smucker said it had adjusted earnings per share of $1.52 compared to $1.45 a year ago; analysts expected $1.59 a share. Adjusted earnings also fell below company expectations.

Smucker also said it expects fiscal 2014 revenue to be down 2 percent this year compared to fiscal 2013; the company previously estimated revenue would be down 1 percent. Adjusted earnings for the year are still expected to range from $5.72 to $5.82 per share, the company said.

Shares of Smucker fell $7.10, or 6.5 percent, to $101.49. Shares are up 20.2 percent, including dividends, since Jan. 1 and are up 22.4 percent from a year ago.

“We are pleased to have delivered another record quarter in earnings per share,” Richard K. Smucker, chief executive officer, said in opening statements during a conference call with industry analysts.

But the company said it expects revenue to drop because of reduced single-serve K-Cup coffee sales and the effects of foreign currency exchange rates.

“We’re confident in our ability to deliver another year of earnings growth,” said Mark Belgya, chief financial officer.

U.S. retail coffee sales accounted for $594.9 million in sales and $180.6 million in segment profit for the quarter. U.S. retail consumer foods accounted for $612.6 million in sales and $99.2 million in segment profit; international sales accounted for $352.4 million in sales and $47.4 million in profit.

Coffee sales were led by increases in the Folgers brand and Dunkin’ Donuts packaged coffee. K-Cup sales increased for Folgers but dropped for Smucker’s less well-known Millstone brand. Coffee profit was helped by lower prices for green coffee beans, the company said.

K-Cup sales now are expected to grow by mid-single digits next year, down from previous forecasts. The company said it plans to expand K-Cup sales into new retail outlets, including dollar stores and through e-commerce. The Folgers brand accounts for about 80 percent of Smucker K-Cup sales.

For the first half of fiscal 2014, Smucker had net income of $280 million, or $2.65 a share, on revenue of $2.91 billion compared to net income of $259.7 million, or $2.36 per share, on revenue of $2.99 billion for the same six-month period in fiscal 2013.

Smucker brands also include Smucker’s, Jif, Crisco, Pillsbury, Eagle Brand and others.

Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com



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