J.M. Smucker Price Increases Drive Quarterly Sales and Income Higher

Scott Peters
07 Jun, 2022
New York City

J.M. Smucker Company, the maker of food products said price increase across all business segments helped to offset product recall costs. 

Fiscal 2022 fourth quarter ending in April sales increased 6% to $2.03 billion and net income increased 37% to $202.1 million. 

Diluted earnings per share increased to $1.88 from $1.35 a year ago. 

The company lifted its quarterly dividend to 99 cents from 90 cents a year ago. 

Net sales increase was driven by 10% increase in prices across all product segments partially offset by 1% decline in volume and product mix and a 1% unfavorable impact of estimated customer returns related to the Jif peanut butter product recall.

The current quarter results reflect the divestiture of dry pet food, natural beverage and grain businesses. 

Gross profit decreased 9% to $69.0 million, including 7% unfavorable impact of unsaleable Jif peanut butter inventory and estimated customer return as of April 30. 

Operating income increased 27% to $302.0 million largely on lower selling and administration costs and also includes estimated recovery of insurance related peanut butter product recall. 

Free cash flow increased to $220.7 million compared to $183.0 million a year ago. 

Segment Results 

U.S. pet food sales in the quarter increased 6% to $718.1 million and segment profit margin improved 180 basis points to 16.8% and segment profit increased 19% to $120.7 million. 

U.S. coffee sales, including brands Folgers, Dunkin, and Cafe Bustelo, increased 11% to $647.2 million and 440 basis points to 25.4% segment profit decreased 5% to $164.2 million. 

U.S. consumer food products sales, including jams, jellies, and peanut butter,  declined 5% to $397.2 million and segment profit margin improved 130 basis points to 23.9% and segment profit was nearly flat at $95.0 million.  

International sales increased 12% to $271.2 million, segment profit rose 18% to $34.5 million, and segment profit margin improved 70 basis points to 12.7%. 

Full-Year Results 

For the full-year net sales were flat at $8 billion and net income decreased to $631.7 million or $5.83 per share from $878.3 million or $7.79 a share a year ago. 

For the year, the company dividend increased 10% to $3.96 from $3.60 a year ago. 

Through stock repurchases and dividends, the company returned $369.7 million in the quarter and $688.5 million in the full year.

The company repurchased 2.0 million common shares for $262.7 million in the fourth quarter.

Guidance and Outlook 

The food products maker guided full-year fiscal 2023 sales to increase between 3.5% and 4.5%, capital expense of $550 million, and free cash flow of $500 million. 

The company sales growth estimate includes 2% unfavorable impact related to manufacturing downtime and customer returns linked to Jif peanut butter product recall. 

Company and Stock 

J.M. Smucker makes pet food, coffee, jams, and jellies and peanut butter. 

J.M. Smucker Company jumped 4.5% to $128.80 after the food products maker reported higher-than-expected quarterly results. 

J.M. Smucker stock has declined 4.5% so far this year.