Orrville, Ohio-based J.M. Smucker Co has announced a 9% increase in sales for its Q4 ended 30 April 2002, to US$176.1m from US$161.4m year on year.
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The company recorded EBITDA of US$23.6m versus US$19.9m in Q4 2001. Net income was US$6.7m, affected by costs incurred by the merger with Jif and Crisco.
Sales for FY 2002 rose 6% to US$687.1m from US$651.2m in 2001. Smucker recorded EBITDA of US$90.8m for FY 2002, up 16% year on year. Net income for the year was US$30.9m, which includes about US$0.13 per share of costs associated with the merger of Jif and Crisco. Excluding those costs, earnings per share would have been US$1.37, up 19% from FY 2001.
Richard Smucker, president and co-CEO, commented: “The strong results are a product of the successful implementation of our three pronged growth strategy of expanding our current market share in our existing products and markets, developing new products, and pursuing acquisitions to strengthen our market leading positions.”
Tim Smucker, chairman and Co-CEO, added: “We continue to expand our share of market in key categories.”
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By GlobalDataDomestic performance
Sales for FY 2002 in the domestic segment were up about 6% year on year, a result of increases across all domestic business areas.
Sales in the consumer business area grew 4% in 2002 year on year, due to the expansion of Sugar Free fruit spreads, natural peanut butters, and Goober peanut butter and jelly combination products, as well as new product introductions. Consumer area sales increased in the grocery, club store, and mass retail channels, while they declined slightly in the military and consumer direct channels.
The foodservice area increased sales 9% year on year as sales and distribution of Smucker’s Uncrustables to schools expanded. Sales of traditional foodservice products were up 1%, but there was some softness due to a weak economy and declines in travel and leisure.
Beverage sales were up 7% for the FY 2002, due primarily to the strong growth of R.W. Knudsen Family and Santa Cruz Organic products.
Sales in the industrial segment were up 11% for the FY 2002, primarily due to the acquisition of the International Flavors and Fragrances (IFF) business in October 2001. The IFF acquisition contributed about US$13m to domestic sales during FY 2002. The additional IFF business has higher margins than the US$40-US$50m of industrial businesses scheduled to be discontinued in fiscal 2003 and 2004.
International segment
Sales in the international segment were up 4% over the prior year. In 2002, the Canadian business increased sales 4% in local currency and sales in Smucker’s Mexican and Latin American markets increased 22% over the prior year. About US$1.9m of the US$3.5m increase in international sales was due to the addition of the Brazilian portion of the IFF business. The impact of the strong US dollar as compared primarily to local currencies in Australia, Brazil, and Canada resulted in international segment sales for FY 2002 being about US$5.4m less, in constant dollar terms, than in the prior year.
Crisco, Jif merger
The company also provided updated status on the merger of the Jif peanut butter and Crisco shortening and oils businesses of The Procter & Gamble Company in a tax-free stock transaction. Smucker is continuing the integration of the two businesses and 400 employees from those operations. The Jif business is performing largely as expected and the Crisco business, while also maintaining its category leadership position, is facing competitive pressure and sales were around US$30m expectations.
Richard Smucker continued, “Our company will focus on maintaining and expanding the Jif business, while implementing the plans developed to bring growth and restore momentum to the Crisco business. Growth will come from a focused dedication on the Jif and Crisco brands as well as increased and consistent consumer marketing support.”
Outlook for FY 2003
Smucker’s updated guidance reflects three key factors: the previously announced exiting of US$40-US$50m of industrial business; a lower revenue base in the Crisco business; and 11 months of Jif and Crisco sales, as the merger closed 1 June 2002.
For FY 2003, the company expects revenues of around US$1.3bn, up about 90% from 2002. EBITDA is expected in be in the range of US$190-US$200m, or around 15% of sales in FY 2003. Additionally, earnings per share should be in the range of US$1.84-US$1.94 compared to US$1.37 in FY 2002. The company noted that if it had been able to include a full twelve months of Jif and Crisco sales and income in FY 2003, its expectations for the year would have fallen within the guidance range previously provided, albeit toward the lower end due to the softness in the Crisco business.
Tim Smucker said: “The combination of three icon brands, Smucker’s, Jif and Crisco, creates a powerhouse of market leadership in the fruit spreads, peanut butter, and edible oil categories. This strategic merger will create a platform for the future growth.”
