Smucker Earned $1.78 per Share

Shares of Smucker (SJM) are pulling back this morning after the company reported fiscal Q1 earnings of $1.78 per share. That was one penny below estimates. However, that total included a charge of seven cents due to “a purchase accounting adjustment attributable to acquired Ainsworth inventory.”

“Our strong first quarter earnings reflect the execution of our strategy, aligning our portfolio for growth in pet food, coffee, and snacking,” said Mark Smucker, Chief Executive Officer. “During the first quarter, we completed the Ainsworth acquisition, which drove much of our year-over-year sales growth, and we are making significant progress toward integrating the business. We also announced a planned divestiture of our U.S. baking business, which is expected to close at the end of this month. In addition, we had strong first quarter performance for key growth brands including Dunkin’ Donuts®, Smucker’s® Uncrustables®, Nature’s Recipe®, and Café Bustelo® while continuing to execute our cost reduction programs to enhance margins and provide fuel for investments in future growth.”

Smucker also updated its guidance. They didn’t alter their full-year EPS range, which is still $8.40 to $8.65 per share. They did pare back their revenue range from $8.3 billion to $8.0 billion. Smucker also lowered its free cash range from $800 million – $850 million to $770 million – $820 million.

The updated guidance reflects “the anticipated impact from the pending divestiture of its U.S. baking business.”

From the Wall Street Journal:

Divesting the baking line, which makes Pillsbury cake mixes, and acquiring pet snack maker Ainsworth were appropriate moves to adjust Smucker’s portfolio. Ainsworth sales were up 28% from a year earlier in the July quarter, and the company said it expects this growth to be sustained for the full year.

But what Smucker really needs, like fellow struggling food giant Campbell, is a convincing plan to turn around its core brands. With respect to Folgers, Chief Executive Mark Smucker said the company is working on “longer-term initiatives to reinvigorate coffee rituals for this iconic brand.” It was unclear what he meant.

Posted by on August 21st, 2018 at 10:42 am


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