J.M. Smucker 4Q Profit Soars, Tops View
The Associated Press
06/18/09 - 07:30 AM EDT
LAUREN SHEPHERD
NEW YORK (AP) J.M. Smucker Co. said Thursday its fiscal fourth-quarter profit more than doubled, helped by consumers' desire to eat at home and the company's acquisition of the Folgers coffee brand last year.
The maker of jams, jellies and Jif peanut butter reported an adjusted profit that easily beat Wall Street's forecast, and the company raised its earnings guidance for 2010.
Pleased investors sent shares up $4.22, or 9.7 percent, to $47.86 in Thursday trading.
The company said the addition of Folgers helped boost sales and profit. While the food company inherited Folgers' existing customers, the brand has also seen new business from budget-conscious shoppers who are forgoing their gourmet brews for lower-cost coffee during the recession.
Smucker said Folgers grew at more than double the retail coffee category rate in April and raised its market share.
On a conference call with investors, Co-Chief Executive Richard Smucker said the company's top priority in 2010 will be to expand the traditional Folgers coffee business the can of grinds used to make countless cups of at-home joe.
Orrville, Ohio-based Smucker earned $94.3 million, or 80 cents per share, in the three months ended April 30, up from $37.1 million, or 67 cents per share, a year ago.
Excluding restructuring, acquisition and integration costs, profit was $1.02 per share well above the 63 cents-per-share estimate of analysts polled by Thomson Reuters. Analysts' estimates typically exclude one-time items.
Sales surged 81 percent to $1.07 billion from $590 million. Analysts predicted lower revenue of $997.1 million.
The company also said its strong overall performance was due partly to the popularity of its brands by consumers now eating at home more in order to save cash. Pillsbury baking mixes and frostings, Hungry Jack potatoes, pancakes and syrups and Eagle Brand sweetened condensed milk posted fourth-quarter volume gains.
"We know that people are eating at home more and going to comfort foods, and we are seeing those trends continue," said Richard Smucker on the call.
Although sales jumped, volume was mainly flat due to a big drop in volume in the oils category. The company blamed a price cut, competitive pressures and the popularity of private-label brands for the dip.
Full-year net income climbed to $266 million, or $3.12 per share, compared with $170.4 million, or $3 per share, in the previous year. Annual sales jumped 49 percent to $3.76 billion from $2.52 billion.
For fiscal 2010, Smucker lifted its adjusted earnings outlook to a range of $3.65 to $3.80 per share. Its prior forecast was for adjusted profit of $3.62 to $3.72 per share. The company anticipates full-year sales of about $4.5 billion.
Analysts expect 2010 earnings of $3.37 per share on revenue of $4.7 billion.
Smucker also said it will launch new ads for all of its brands in the upcoming year.
Janney analyst Mitchell Pinheiro said in a note to investors that the guidance boost and the strong fourth quarter results have led him to believe the value of Smucker's shares is greater than the current stock price.
Pinheiro, who has a "Buy" rating on the stock, said the outlook for 2010 looks positive, particularly with Folgers in the brand lineup.
Standard & Poor's also raised its price target to $55 from $49, citing the company's results.
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AP Business Writer Michelle Chapman contributed to this report.
