US food and beverage group J.M. Smucker has cut its forecast for underlying annual earnings, pointing to concerns over costs and the supply chain.

Smucker is now predicting adjusted earnings per share will come in between $8.25 and $8.65 versus its June estimate of $8.70-$9.10. That EPS metric fell 20% in the first quarter to $1.90.

“The pandemic and related implications, along with cost inflation and volatility in supply chains, continue to impact financial results and cause uncertainty and risk for the fiscal year 2022 outlook,” Smucker said.

“Any manufacturing or supply chain disruption, as well as changes in consumer mobility and purchasing behaviour, retailer inventory levels, and macroeconomic conditions could materially impact actual results.”

The Jif peanut butter owner suggested price increases linked to inflation will help temper an anticipated decline in sales this fiscal year.

Smucker also adjusted its full-year sales forecast today (26 August) and now expects a drop of 1.5% to 2.5%. When the Ohio-based company announced its 2021 annual results in June, it estimated a decrease of around 2-3%.

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The group said it sees at-home consumption tailing off over the rest of the year as the away-from-home channel starts to recover. It was a different scenario at the height of the Covid-19 pandemic, when lockdowns forced people to consume more food at home.

Sales in the first quarter to 31 July fell 6% to US$1.86bn, Smucker reported today, but noted its annual sales excluding recent divestitures – Crisco cooking oil and Natural Balance pet foods – are likely to increase by about 2.5%.

The New York-listed firm explained in the results commentary: “On a comparable basis, net sales are expected to increase approximately 2.5% 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 net sales guidance reflects incremental net pricing actions in response to higher costs versus previous expectations, offset by reduced volume/mix, inclusive of anticipated price elasticity and supply disruption for internationally sourced pet-food products.”

Smucker added that first-quarter sales rose 1% when the impact of non-comparable net sales of $135.5m related to the disposal of Crisco and Natural Balance were discounted, and with a $10.4m favourable currency effect.

Elsewhere, its operating income dropped 28% to $259.4m and was down 20% on an adjusted basis at $323.4m.

President and CEO Mark Smucker said: “Our industry continues to navigate a period of significant supply chain volatility, disruption, and cost inflation. In the near term, we expect to experience higher raw material and logistics cost increases. However, we are optimistic in managing these challenges and remain confident in the momentum of our business, the talent and commitment of our people, and our strengthened financial position to deliver balanced top- and bottom-line growth and long-term shareholder value.”