Benefiting from the recall of a rival peanut butter,
on Thursday reported a 21% increase in year-over-year fourth-quarter earnings.
Enhanced demand for peanut butter in the quarter ended April 30 resulted in $10 million to $15 million in incremental sales for Smucker, which makes Jif peanut butter. Net sales increased 8% to $493 million, excluding divested businesses.
The Orrville Ohio-based maker of well-known kitchen brands such as Crisco, Hungry Jack and Pillsbury earned 75 cents a share, compared with expectations of 64 cents a share by analysts polled by
. In the year-ago quarter, Smucker earned 62 cents a share.
"We achieved record earnings for the quarter and the year, with solid growth across most of our brands," said President and co-CEO Richard Smucker.
Earnings per share for 2007 were $2.76 vs. $2.45 per share last year, an increase of 13%. Smucker's objective for 2008 is top-line growth of 8%. It expects half to be achieved from increased market share and the other half through acquisitions.
CFO Mark Belgya, however, warned investors not to expect a repeat of the peanut butter demand seen in the fourth quarter. Rival
in February had to recall some of its brands, including Peter Pan peanut butter, after it was linked to a salmonella outbreak.
While Smucker didn't have the capacity to meet all of the demand, it continues to see a spillover effect, Belgya said.
Raw material costs are affecting Smucker the same way they have affected all food sector companies.
Belgya said that in the last 12 weeks, soy bean oil and wheat prices have risen significantly. Milk costs have also gone up dramatically, and price increases will go into effect in July. The company does not expect a consumer backlash, since most food packaging businesses have all had to raise prices.
The integration of the recently acquired Eagle Family Foods is progressing as planned. By August 1, it is expected to be shipped with other Smucker products in time for the fall bake season. Eagle is the largest producer of canned milk in North America and used heavily in baking.
Uncrustables, a premade peanut butter and jelly sandwich, continued to beat the company's internal sales projections. The food service business experienced a 21% increase in sales, the company said. The food service business benefited from increased demand from health care, school and elder care facilities, Belgya said.
"We're seeing a shift to consumers eating at home," said Chairman and co-CEO Tim Smucker.
The stock was trading up $4.09, or 7.2%, to $60.89 on Thursday afternoon.