J.M. Smucker Posts Disappointing Profit Forecast
J.M. Smucker Co has posted lower-than-expected quarterly results and forecast full-year profit well below estimates as price hikes for Jif peanut butter and Crisco cooking oil hurt sales.
Smucker, like other U.S. food companies, has been battling higher freight costs as well as intense competition from several private label brands in a number of categories where it operates.
The disappointing profit forecast spooked investors across the packaged foods sector - shares of Kellogg Co, General Mills Inc and Campbell Soup Co were all trading down before the opening bell.
Smucker forecast adjusted profit of $8.40 to $8.65 per share for the full year, well short of analysts' average estimate of $9.22.
Sales at Smucker's consumer foods division, that houses brand such as Crisco and Pillsbury, fell 2 percent in the fourth quarter. Smucker said in April it was reviewing strategic options for its baking unit that includes the Pillsbury brand.
Marketing expenses also rose in the quarter, hitting profit margins.
However, its Folgers and Dunkin' Donuts coffee brands performed well during the quarter, helped by lower coffee prices.
"Smucker may need to continue to spend up in order to support many of its brands, while also continuing to sharpen some of its price points to help volume performance," Deutsche Bank analyst Rob Dickerson wrote in a pre-earnings note.
Net income rose to $185.9 million in the quarter ended April 30, from $110.4 million, a year earlier.
The company said it earned $1.93 per share on an adjusted basis that included a 10 cent impact from some charges. Analysts on average had estimated a profit of $2.18 per share, according to Thomson Reuters I/B/E/S.
Net sales fell marginally to $1.78 billion, also missing the estimate of $1.80 billion.