Food Business News - June 19, 2012 - 34

With earnings soft, Smucker launches growth initiatives
Brand building investments and innovation on tap in ﬁscal 2013 to improve results
the year before. Sales for the year were $5,525,782,000, up 15% from $4,825,743,000 during the previous year. During the fourth quarter, net income rose to $104,130,000, or 93c per share, from $94,880,000, or 82c per share, in the same period a year ago. Net sales increased 14% to $1,355,353,000 from $1,187,167,000. Proﬁt during the year for the U.S. Retail Coffee segment was $543 million, up 1% from $536.1 million during the previous year. Sales for the year were $2,297.7 million, up 19% from $1,930.9 million during the previous year. The U.S. Retail Consumer Foods segment had proﬁt of $393.3 million, down 3% from $406.5 million during the previous year. Sales for the segment were $2,094.5 million, up 7% from $1,953 million during the previous year. In a June 7 conference call with analysts, Vince Byrd, president and chief operating ofﬁcer, identiﬁed several key initiatives for Smucker heading into ﬁscal 2013, including a focus on brand building investments, innovation, capitalizing on recent acquisitions, realized savings from supply chain projects and better management of price points. Planned innovation for the U.S. retail coffee segment includes the relaunch of Folgers Gourmet Selection bag coffee, which Mr. Byrd said repositions the brand as an entry-level price point into the premium coffee segment. He said Smucker also plans to build on the success of its K-Cup offering with the introduction of two new varieties, and will launch Folgers Fresh Breaks, a premium, single-serve instant coffee with a “roast and ground-like experience.” With green coffee prices expected to be lower in 2013, Mr. Byrd said he expects lower prices on the shelf, which should improve coffee volume in 2013. “In May we announced an average 6% price decrease on the majority of our U.S. retail packaged coffee products,” he said. “Retailers are now beginning to reﬂect this decrease on the shelf.” Another promising area of the coffee business is the recently acquired Rowland Coffee, Mr. Byrd said. In 2012, Rowland Coffee brands delivered $100 million in net sales for the U.S. retail coffee segment, a ﬁgure Mr. Byrd said Smucker expects to double over the next ﬁve years. Turning to consumer foods, Mr. Byrd said Smucker expects overall volume will continue to be pressured in 2013, primarily in the ﬁrst half due to higher price points and competitive activities. To address the challenges, he said Smucker has several new product introductions on tap, including the recently launched Jif hazelnut spreads and new varieties of Pillsbury baking mixes, frostings and seasonal items. “Our innovation efforts have led to the launch of a downsized cake mix offering,” Mr. Byrd explained. “This new size provides consumers with the same full-size great tasting cake, but is expected to improve proﬁtability in what was currently a low-margin category of our business. This proﬁt improvement is expected to begin in 2014 as the coming year will be one of transition.” Signiﬁcant investments to expand capacity of the company’s Uncrustable sandwich manufacturing facility in Scottsville, Ky., have positioned Smucker to better capitalize on strong consumer demand for the product. Looking ahead to ﬁscal 2013, J.M. Smucker said net sales are expected to increase about 7% over ﬁscal 2012, including an incremental eight-month contribution from the Sara Lee food service business. Non-GAAP income per diluted share is expected to range from $5 to $5.10, excluding special project costs of approximately 50c per diluted share. FBN

ORRVILLE ORRVILLE, OHIO — Despite a strong fourth quarter in which acquisitions and higher prices helped lift proﬁt 10%, fullyear earnings at J.M. Smucker Co. fell 4% from ﬁscal 2011. For the year ended April 30, the company had income of $459,744,000, equal to $4.06 per share on the common stock, which compared with income of $479,482,000, or $4.06 per share,

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June 19, 2012

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Food Business News - June 19, 2012

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