Coffee Perks Up Smucker's Fiscal 2013 with Strong Volume Gains, while Production Expands for Top Brands

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Researched by Industrial Info Resources (Sugar Land, Texas)--Food industry leader The J.M. Smucker Company (NYSE:SJM) (Smucker's) (Orrville, Ohio) saw positive results in the company's 2013 fiscal year as volume gains, especially from coffee, offset the effects of lower pricing. Net income was reported to be $130.34 million for the quarter, a 25.17% increase from fourth-quarter 2012, and $544.21 million for the year, an 18.37% increase from fiscal 2012.

Net sales stood at $1.34 billion for the quarter, a 1.16% decrease from fourth-quarter 2012, and $5.9 billion for the year, a 6.73% increase from fiscal 2012. The drop in sales revenue for the quarter was attributed to price declines taken earlier in the fiscal year. The Folgers and Dunkin' Donuts brands led the volume gains in the U.S. Retail Coffee segment during the quarter, which proved to be the strongest driver of growth, while the U.S. Retail Consumer Foods segment benefited from solid volume gains for Jif peanut butter, Pillsbury frostings and Uncrustables frozen sandwiches.

Smucker's also benefited from lower commodity costs during the fourth quarter, especially for green coffee, although selling, general and administrative expenses increased as the company invested heavily in marketing, particularly for coffee brands.

Industrial Info is tracking $311 million in active projects involving J.M. Smucker, including the $120 million expansion of a jam and jelly spread plant in Orrville, Ohio. The project involves constructing a 200,000-square-foot or larger building and installing processing and packaging equipment to increase capacity. The Dennis Group LLC (Springfield, Massachusetts) has been awarded the design-build contract.

"Operationally, we completed the $70 million expansion of our two coffee facilities in New Orleans, and we commenced the fruit spreads operations at our new manufacturing plant in Orrville, Ohio," said Richard Smucker, the chief executive officer of J.M. Smucker, in a conference call. "With 80% of the anticipated volume currently being produced at the new facility, the transition is expected to be completed by the end of the calendar year."

Smucker executives expect to capital expenditures to total roughly $270 million in fiscal year 2014. Net sales are expected to be "comparable" to fiscal 2013, with price declines offset by strong sales and volume growth.

"Initiatives [for 2014] include the launch of approximately 100 new items, crossing all key brands and categories," Richard Smucker said in the conference call. "At the same time, we project another increase in marketing support, including new advertising and digital investments."

He added: "We have initiated capital projects to provide capacity necessary to support the additional growth opportunities of our Jif and Uncrustable brands. This includes expanding our nut butter supply footprint, including converting our Memphis fruit spreads plant into a peanut butter facility. In addition, we are progressing at capacity expansion initiatives at our Uncrustable facility. In 2014, we expect to complete the installation of an additional sandwich line--this comes on the heels of recently doubling our bread-baking capacity."

For more information, visit Industrial Info's North American Food and Beverage Project Database.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.