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Released August 20, 2012 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Food industry leader The J.M. Smucker Company (NYSE:SJM) (Orrville, Ohio) saw mostly positive results in the first quarter of the company's fiscal year 2013, driven by volume growth, stronger prices, and benefits from the acquisition of business from the Sara Lee Corporation (NYSE:SLE) (Downers Grove, Illinois). Net income for the quarter was reported to be $110.86 million, a 0.59% decrease from fiscal first-quarter 2012. However, company executives stressed that when excluding the costs of special projects for both quarters, including restructuring, mergers and integration, income was $129.3 million, a 0.82% increase.
Net sales stood at $1.37 billion, a 15.21% increase from the same period last year. Price gains on peanut butter were partly offset by price declines in coffee products, although both the Jif peanut butter and Folgers coffee brands saw volume increases. Among the quarter's strongest sellers were Jif, which saw a 48% increase; the Pillsbury brand, which saw a 10% increase; and the entire International, Foodservice and Natural Foods segment, which saw a nearly 40% increase that was driven by the acquisition of Sara Lee Corporation's foodservice coffee and hot beverage business. The Sara Lee business, which was acquired in January 2012, contributed $86.7 million to net sales.
The company also benefited from a $15.6 million increase in favorable unrealized mark-to-market adjustment on derivative contracts.
Industrial Info is tracking $236 million in projects involving Smucker's that are in their planning, engineering or construction phases, including the $70 million expansion of a frozen food plant in Scottsville, Kentucky. Plans for the project, which is now in the detailed engineering phase, include constructing a building expansion and installing process and associated equipment to increase the production of frozen sandwiches and waffles.
"From an industry perspective, consumers continue to feel pressed by the economy, and we don't expect overnight reversals in consumer confidence," said Richard Smucker, the chief executive officer of Smucker's, in a conference call. "However, we are beginning to see some positive indicators in industry volume trends. While total retail U.S. food and beverage volume has been soft for an extended period, the industry has seen gradual improvements... with volume up slightly in the latest 4-week period. Moderating food inflation, as a result of declining commodity costs, has clearly been a factor in this improvement in the food and beverage volume."
All three major Smucker segments reported gains in sales when compared to the same quarter last year, but the U.S. Retail Coffee segment reported declines in profits, partly due to weaker prices and higher costs for green coffee:
"The impact of the current U.S. drought will not be fully understood and realized by the industry for a number of months," Richard Smucker said in the conference call. "We will be monitoring this area, and adjusting as appropriate.
"Overall, while we remain cautious, we are more optimistic about the near term than we were a few months ago."
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.
Net sales stood at $1.37 billion, a 15.21% increase from the same period last year. Price gains on peanut butter were partly offset by price declines in coffee products, although both the Jif peanut butter and Folgers coffee brands saw volume increases. Among the quarter's strongest sellers were Jif, which saw a 48% increase; the Pillsbury brand, which saw a 10% increase; and the entire International, Foodservice and Natural Foods segment, which saw a nearly 40% increase that was driven by the acquisition of Sara Lee Corporation's foodservice coffee and hot beverage business. The Sara Lee business, which was acquired in January 2012, contributed $86.7 million to net sales.
The company also benefited from a $15.6 million increase in favorable unrealized mark-to-market adjustment on derivative contracts.
Industrial Info is tracking $236 million in projects involving Smucker's that are in their planning, engineering or construction phases, including the $70 million expansion of a frozen food plant in Scottsville, Kentucky. Plans for the project, which is now in the detailed engineering phase, include constructing a building expansion and installing process and associated equipment to increase the production of frozen sandwiches and waffles.
"From an industry perspective, consumers continue to feel pressed by the economy, and we don't expect overnight reversals in consumer confidence," said Richard Smucker, the chief executive officer of Smucker's, in a conference call. "However, we are beginning to see some positive indicators in industry volume trends. While total retail U.S. food and beverage volume has been soft for an extended period, the industry has seen gradual improvements... with volume up slightly in the latest 4-week period. Moderating food inflation, as a result of declining commodity costs, has clearly been a factor in this improvement in the food and beverage volume."
All three major Smucker segments reported gains in sales when compared to the same quarter last year, but the U.S. Retail Coffee segment reported declines in profits, partly due to weaker prices and higher costs for green coffee:
- The U.S. Retail Coffee segment reported sales of $520.8 million, a 4.14% increase from first-quarter 2012, and profits of $126.4 million, a 9.52% decrease.
- The U.S. Retail Consumer Foods segment reported sales of $528.4 million, a 15% increase from the same period last year, and profits of $107.8 million, a 36.46% increase.
- The International, Foodservice and Natural Foods segment reported sales of $320.5 million, a 39.77% increase from first-quarter 2012, and profits of $40.7 million, a 5.71% increase.
"The impact of the current U.S. drought will not be fully understood and realized by the industry for a number of months," Richard Smucker said in the conference call. "We will be monitoring this area, and adjusting as appropriate.
"Overall, while we remain cautious, we are more optimistic about the near term than we were a few months ago."
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.
