J.M. Smucker Co has warned of a $125 million (€116.9 million) hit in the full year from the recall of certain Jif peanut butter products following possible contamination.
The recall would also have a 90% on the Folgers coffee maker's profit, the Ohio-based company said, sending its shares down 3% in premarket trading.
In May, J.M. Smucker said it was recalling nearly 50 types of Jif peanut butter products sold in the United States after a Food and Drug Administration investigation into a U.S. outbreak of Salmonella Senftenberg infections.
Manufacturing downtime, customer returns and unsaleable inventory resulting from the recall are expected to result in the $125 million hit in fiscal 2023.
The company expects adjusted earnings per share to range from $7.85 to $8.25 in fiscal year 2023, compared with analysts' estimates of $8.91 per share, according to Refinitiv IBES.
For the fourth quarter ended April 30, net sales rose 6% to $2.03 billion (€1.9 billion), compared with estimates of $1.98 billion (€1.85 billion).
"Our fourth quarter and full-year results demonstrate the continued execution of our strategy and momentum of the business, amid a challenging and dynamic environment," said Mark Smucker, president and chief executive.
"Our strong financial results reflect sustained consumer demand for at-home food and coffee and consumers' desire for our trusted and iconic brands."
Looking ahead, the company said that the pandemic and its related implications, along with ongoing cost inflation and volatility in supply chains, are likely to cause 'uncertainty and risk' for its fiscal year 2023 outlook.
News by Reuters, edited by ESM. For more A-Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.