Vending

JM Smucker reports Q2 2022 sales gain, earnings loss

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November 23, 2021

The J.M. Smucker Co., which owns Folgers and other U.S. consumer brands, reported improved sales and lower earnings for the 2022 second quarter ending Oct. 31, 2021, reflecting the divestiture of the Crisco business on Dec. 1, 2020, and the divestiture of the Natural Balance business on Jan. 29, 2021. according to an earnings report.

Net sales increased 1% from $2.03 billion in Q2 2021 to $2.05 billion in Q2 2022. Excluding noncomparable net sales in the prior year of $135.7 million for the divested Crisco and Natural Balance businesses, as well as $5.6 million of favorable foreign currency exchange, net sales increased 8% to $146.1 million.

The increase in comparable net sales was due to favorable volume/mix and higher net price realization for each of the company's U.S. retail segments and for international and away-from-home.

Net income fell 11% from $230.8 million to $206 million in the comparative quarters.

Net income per common share assuming dilution fell 6% from $2.02 to $1.90 in the comparative quarters while adjusted earnings per share assuming dilution rose from $2.39 to $2.42.

U.S. retail coffee sales increased $50.4 million in Q2 2022, while volume/mix increased net sales 5%, driven by the Dunkin' and Café Bustelo brands. Net price realization increased net sales by 3%, primarily reflecting list price increases and trade spend reductions for roast and ground products. Segment profit increased $5.7 million, primarily reflecting higher net pricing and the increased contribution from volume/mix, partially offset by higher commodity costs.

U.S. retail consumer foods sales decreased $37.9 million for the quarter. Excluding $75.1 million of noncomparable net sales in the prior year related to the divested Crisco business, net sales increased 9% to $37.2 million. Volume/mix increased net sales by 6%, driven by Smucker's Uncrustables frozen sandwiches and Jif peanut butter.

Segment profit for U.S. retail consumer foods decreased $24.3 million, reflecting the noncomparable segment profit in the prior year related to the divested Crisco business.

International away-from-home sales increased $10.6 million for Q2 2022. Excluding $9.8 million of noncomparable net sales in the prior year related to the divested Crisco business and $5.6 million of favorable foreign currency exchange, net sales increased 6% to $14.8 million.

The $2.05 in quarterly revenue surpassed analyst expectations by 3.98%, while the $2.43 adjusted EPS beat analyst expectations of $2.04, according to Zacks.

Shares traded at $126.44 today against a 52-week range of $110.52-$140.65.

"Our second quarter results, including comparable net sales growth of 8% exceeded our expectations and demonstrated sustained momentum for our business and strong execution by our talented employees in what remains a dynamic operating environment," Mark Smucker, president and chief executive officer, said in the press release. "We delivered robust organic top-line growth across each of our segments, reflecting consumers' continued desire for our brands and the successful implementation of initial pricing actions."

Net sales for the year are expected to range from down 0.5% to up 0.5% compared to the prior year, which incorporates an impact of $355.6 million related to the divested Crisco and Natural Balance businesses. On a comparable basis, net sales are expected to increase approximately 4.5% at the mid-point of the net sales guidance range, reflecting a deceleration in at-home consumption trends, more than offset by higher net pricing across multiple categories, continued double-digit net sales growth for the Smucker's Uncrustables brand, and a recovery in away-from-home channels. The increase in net sales guidance reflects stronger than anticipated demand in the second quarter and remainder of the year, as well as incremental net pricing actions in the remainder of the fiscal year in response to higher costs.