JM Smucker, the US condiments-to-coffee group, booked a drop in first half sales and earnings on the back of weaker volumes at its US retail coffee business.
The company said sales in the six months to 31 October fell 4% to US$2.8bn. The decline was more pronounced in the second quarter, when sales slid 5% due to decreased volumes “most significantly” in retail coffee.
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First-half operating income slipped 1% to $472.3m. The group’s operating margin strengthened, however, rising to 16.8% of sales from 16.4% of sales in the year-ago period. Net income was down 2% to $274.3m.
Last week, Smucker slashed its full-year sales and profit forecasts on the back of weakness in its coffee division. For the full year, sales are expected to decrease to 1% compared to a previous forecast of growth of 3-4%. Earnings guidance was lowered to $5.45-5.65 per share compared with an earlier expectation of $5.95-6.05.
CEO Richard Smucker said today (19 November) that while coffee fell short of expectations, the company’s consumer food brands put in a solid showing. “The balance of our businesses performed well led by the Jif, Crisco and Smucker’s brands. As we move to the second half of the fiscal year, we have adjusted our tactics to address short-term challenges. We continue to have healthy, consumer-relevant brands, a strong innovation pipeline, and a very talented team. We are optimistic about our prospects for future, long-term growth,” he commented.
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