Pet food sales had J.M. Smucker Co. second quarter earnings — and shareholders — purring.
The Orrville maker of jams, jellies, coffee, peanut butter, dog and cat food, and other food products reported higher-than-expected earnings and revenue Thursday morning. The company also slightly changed its full-year adjusted earnings outlook.
Smucker stock was up strongly in early afternoon trading. Shares rose $10.27, or 9.6 percent, to $116.78 as of 12:20 p.m. Shares are down 11.1 percent since Jan. 1 and are down 13 percent from a year ago.
Smucker reported net income of $194.6 million, or $1.71 a share, on revenue of $1.92 billion for the second quarter ending Oct. 31. That compares to net income of $177.3 million, or $1.52 a share, on revenue of $1.91 billion a year ago.
Both earnings and revenue beat analyst estimates.
“We are pleased with our second quarter results, primarily driven by our pet food business and the strong performance of a number of key brands across all our businesses,” Mark Smucker, chief executive officer, said in a news release.
There were double-digit sales increases for Nature’s Recipe dog food, Dunkin’ Donuts coffee, and Jif peanut butter, he said.
“We also experienced continued strong growth of our brands in e-commerce, as sales in this channel doubled in the quarter for our U.S. retail segments,” Smucker said. “We are confident in the ability of our brands to win in the rapidly changing retail environment. In addition, we remain focused on achieving sustainable cost reductions that support both the bottom-line and fuel investments in future growth.”
In a conference call with industry analysts, Smucker said the company, without going into specifics, continues to look at making acquisitions. Acquisitions remain one of the four pillars of the Smucker Co. “strategic roadmap,” he said.
“We continue to keep our lines in the water and look at a number of opportunities but as always we are prudent and diligent and we want to make the right acquisitions at the right price so that we can generate a return for our investors,” he said.
Company officials told analysts they expect a new manufacturing plant in Colorado that will open in the company’s 2020 fiscal year will double sales of Uncrustable peanut butter and jelly sandwiches, now at about $250 million a year. The company also is working to double sales in the next several years of its Cafe Bustelo coffee brand, currently a $125 million a year business.
Smucker Co. will be introducing Dunkin’ Donuts canister coffee and new Milk-Bone dog snacks in the 2018 fiscal year and will have other product launches as well.
The company is working to bolster sales of its Folgers coffee brand, which were down 6 percent from a year ago. The company continues to expand into e-commerce.
For the second quarter, U.S. pet food sales totaled $552.1 million, up $21.1 million from a year ago. Higher sales for the company’s Nature’s Recipe and Meow Mix were largely responsible for the increase.
U.S. retail consumer food sales fell 5 percent from a year ago to $531.5 million, but segment profit was up $12 million from a year ago.
U.S. retail coffee sales rose $900,000 from a year ago to $552.7 million, but segment profit fell $33.9 million from a year ago largely because of higher green coffee bean costs and other factors.
Smucker said it expects full-year 2018 adjusted earnings per share will range from $7.75 to $7.90 compared to previous guidance of $7.75 to $7.95, down slightly on the upper end of the range largely because of anticipated higher freight costs.
J.M. Smucker brands include Smucker’s, Folgers, Jif, Dunkin’ Donuts, Crisco, Pillsbury, R.W. Knudsen, Hungry Jack, Milk-Bone, 9Lives, Meow Mix and others.
Reporter Jim Mackinnon covers business and county government. He can be reached at 330-996-3544 or firstname.lastname@example.org. Follow him @JimMackinnonABJ on Twitter or http://www.facebook.com/JimMackinnonABJ
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