Smucker's Q4 profit drops 21% but beats expectations, sales rise
J.M. Smucker's (NYSE:SJM) announced Thursday a 21% drop in its fourth quarter profit, despite an increase in sales, as volatile commodity costs hit margins.
For the three months ending April 30, Ohio-based Smucker's posted net income of $94.9 million, or $0.82 per share, compared to the year-ago period of $120.6 million, or $1.01 per share.
Adjusted for restructuring, merger and integrations costs, profits were $115.3 million, or $1.00 per share, barely beating analysts' expectations of $0.99 per share.
Smucker's said that it expects its fiscal 2012 earnings to be in the range of $5.00 to $5.15, in line with analysts' estimates of $5.12.
The drop in quarterly earnings came despite an 11% increase in net sales to $1.19 billion, from the year-ago $1.10 billion.
Smucker's coffee segment, which includes brands like Folgers and Dunkin' Donuts, saw a 21% hike in sales, mainly from three price increases during the quarter, totaling 23%.
The only unit of the business to report a drop in sales was the US retail consumer division, which saw revenue drop 2% to $266.2 million. Volume gains in peanut butter and fruit spreads offset declines in the sale of Smucker's uncrustables sandwiches.
Meanwhile, the oils and baking unit saw an 11% jump in sales to $181.3 million, on higher sales of Pillsbury products, baking mixes and frostings.
Special markets, which includes international sales, found an 8% increase in sales to $234.3 million. The company said volume gains in coffee and pickles helped move sales, which was offset by a drop in flour, and its Europe's Best line of frozen fruits and vegetables.
Overall gross margins dropped to 36.8% in the quarter from 40.6% a year earlier, mainly due to price declines on Crisco oils, the company said.
"As we begin the new fiscal year, we remain focused on building our brands while navigating through this period of commodity cost volatility," said Co-CEO Richard Smucker.
The company's stock on the New York Stock Exchange increased over 2% Thursday morning, trading at $77.95 per share.
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