JM Smucker has reported falling quarterly profits from its consumer food business as higher commodity costs ate into earnings.
The company said today (18 August) that profits from the company’s US retail consumer foods business dropped 15% to $79m during the three months to 31 July.
Go deeper with GlobalData
JM Smucker pointed to the rising cost of flour, oils and milk and said the price increases it had secured had not offset the higher raw-material prices.
Price increases did help sales from the division, which increased 2% to $459.5m. Volumes, however, fell 3%.
The results from JM Smucker’s US retail consumer foods division were in contrast to its two other divisions – one that is grouped together as international, foodservice and natural foods and the other, coffee, which is the company’s largest unit. Sales and profits from both divisions were up.
In total, JM Smucker reported a net income of US$111.5m, up 8% from the same period last year. Operating income reached $180.7m for the three months to the end of July, marking an increase of 9%. The group’s net sales jumped 14% to reach $1.19bn.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“We delivered strong sales and earnings growth this quarter, with net price realisation across most categories and contributions from the recently acquired Rowland Coffee business,” said CEO Richard Smucker.
He added that while the market place remains “very competitive,” the company said it was confident in confirming its earnings outlook for the fiscal year.
The company’s estimate of income per diluted share is unchanged, and expected to range from $5.00 to 5.15, excluding special project costs of $0.55 to $0.60 per diluted share.
JM Smucker it expects moves to rise prices would still lead to a “significant” increase in annual net sales. However, the company said its recent move to reduce prices on the majority of its coffee products sold in the US by 6% is expected to lower the growth in sales, from its previous estimate of growth of 20%.
Shares in JM Smucker were down 6.25% at $70.84 at 13:08 ET.
Click here for the full statement from JM Smucker.
