Uncrustables owner JM Smucker today (27 August) upped its forecast for full-year net sales after a fiscal first quarter that beat management’s expectations.
The change to forecasts was slight but was a positive piece of news for a US manufacturer that has faced questions on Wall Street over parts of its strategy.
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JM Smucker, which also owns brands including Hostess Twinkies, now sees its net sales growing 3-5%, up from its previous forecast of 2-4%.
The business kept its forecast for annual adjusted earnings per share unchanged at $8.50-9.50.
“Our first-quarter results exceeded our expectations and reflect the continued momentum of the business. Our teams demonstrated agility throughout the organisation, and though the external environment continues to be dynamic we are successfully managing what we can control,” CEO and chair Mark Smucker said.
Neverthless, JM Smucker’s share price fell in pre-market trading.
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By GlobalDataIn the three months to the end of July, JM Smucker’s net sales fell 1% to $2.11bn. Excluding recent asset sales and exchange rates, net sales increased 2%.
Gross profit fell 40% to $474.7m amid high commodity costs, “unfavourable volume/mix” and the impact of the disposals.
In February, JM Smucker sold its Cloverhill and Big Texas brands to fellow US group JTM Foods.
Last October, the company offloaded its Voortman cookies brand to US snacks maker Second Nature Brands.
Operating income dropped 87% to $45.6m. Adjusted operating income decreased 17% to $370.3m.
JM Smucker recorded a first-quarter loss of $43.9m against a net profit of $185m in the first quarter of its previous financial year.
Adjusted earnings per share was $1.90, a decrease of 22%. TD Cowen analyst Robert Moskow said the consensus forecast among analysts was for adjusted EPS to reach $1.93.
Mr Smucker added: “Due to the better-than-expected first quarter results and sustained momentum for our portfolio of leading brands, we are raising our net sales expectations for the fiscal year. We remain focused on investing in our key growth platforms which will enable us to deliver long-term growth and increase shareholder value.”
In June, JM Smucker said it would “narrow our priorities” for its sweet snacks division after booking another set of impairments against the business.
The company recorded impairment charges of $980m made up of $867.3m linked to goodwill in its sweet baked snacks unit and a $112.7m impairment tied to the Hostess brand.
JM Smucker, which acquired US snacks maker Hostess Brands in a $5.6bn deal two years ago, recorded over $1bn in impairment charges for the same units in March.
The acquisition of Hostess raised eyebrows on Wall Street at the time, while the subsequent sale of the Voortman business was questioned by some analysts.
JM Smucker’s first-quarter results showed the net sales from its sweet-baked snacks division dropped 24% to $253.2m. Excluding the assets sold to JTM Foods and Second Nature Brands, net sales fell 10%. Volume/mix declined 8%.
The net sales from JM Smucker’s US retail pet foods and its US frozen-handheld and spreads divsions also decreased.
The Folgers’ maker’s net sales from its US retail coffee business unit increased 15% year on year.
