"We are pleased with the start to our fiscal year as we delivered record first quarter earnings per share, which exceeded our expectations," said CEO Mark T. Smucker. "...we remain on track to achieve our original expectations for full-year earnings per share."
CLEVELAND, Ohio -- The J.M. Smucker Co. said its net sales declined 7 percent for the first quarter of its 2017 fiscal year, in part because the company sold off its canned milk business, but that it remains confident in its outlook for fiscal 2017 as a whole.
For the first quarter that ended July 31, Smucker's net sales slipped $136.2 million to $1.82 billion, compared to $1.95 billion for the first quarter of fiscal 2016. The company said $39.5 million of that decline was from the U.S. canned milk business that Smucker exited on Dec. 31, 2015. Lower retail coffee prices and weaker sales of pet foods also contributed to lower sales.
Smucker's profits for the quarter rose 25 percent to $170 million, up from $136.4 million in the first quarter of last year. Its profits per diluted share rose 28 percent to $1.46 per share, up from $1.14 per diluted share last year.
Wayne County-based Smucker said it has cut about $32 million in costs during the first quarter, as part of efforts to achieve $100 million in synergies this fiscal year.
J.M. Smucker CEO Mark T. Smucker "We are pleased with the start to our fiscal year as we delivered record first quarter earnings per share, which exceeded our expectations," said Chief Executive Mark T. Smucker, in a written statement. "Despite the impact of deflation on the top line, we remain on track to achieve our original expectations for full-year earnings per share.
"We are strengthening a great portfolio of brands by investing in new capabilities and on-trend platforms that are essential to long-term sales growth," he said. "At the same time, we are focused on sustainable cost reductions that are delivering significant bottom-line benefits. For these reasons, we remain confident in achieving our long-term objectives and delivering continued shareholder value."
Mark Smucker became the food company's fifth-generation president and chief executive on May 1.
Previously president of the company's Consumer and Natural Foods division, which includes his family's namesake Smucker's Preserves, Jif Peanut Butter, and Crisco Oils, he succeeded his uncle, Richard K. Smucker, who has been CEO since 2011 and Co-CEO since 2001. Richard Smucker is now the executive chairman of the board, succeeding his elder brother and Mark's father, Timothy P. Smucker, who is now chairman emeritus.
Among the first-quarter highlights reported Tuesday:
-- Net sales of U.S. retail coffee are down 9 percent, to $513.3 million, compared with the first quarter of last year, because the company twice cut retail prices by 6 percent on Folgers and Dunkin' Donuts coffees sold in U.S. supermarkets because its commodity costs dropped. Higher sales of Folgers and Cafe Bustelo brand coffees were offset by lower sales of Dunkin' Donuts K-Cup pods.
-- Net sales of U.S. retail consumer foods were down 8 percent, to $537 million, because last year's results included the canned milk business. Increased sales of R.W. Knudsen Family and Sahale Snacks brands were offset by lower sales of Smucker's brand products.
-- Net sales of U.S. retail pet foods dropped 6 percent to $519.5 million. Lower selling brands included Kibbles 'n Bits, Meow Mix, and Natural Balance.
-- Net sales of international and foodservice brands declined 3 percent to $246 million, related to the loss of the U.S. canned milk business and unfavorable currency exchange rates.
-- For the full fiscal year, the Smucker Co. expects net sales to decline 2 percent to 3 percent, again because of exiting the canned milk business. Otherwise, sales would be flat to down 1 percent.
Smucker's shares closed at $143.63, down 8 percent or $12.60, from Monday's close of $156.23.