J.M. Smucker Co.’s net income rose 5 percent in its fiscal first quarter on lower costs, though the company was squeezed by higher coffee bean prices and price competition on store shelves.
The maker of Jif peanut butter, Folgers coffee and other foods said Friday that it earned $102.9 million, or 86 cents per share, for the quarter. That’s up from $98.1 million, or 83 cents per share, a year earlier. Net income was $1.04 per share excluding restructuring and other charges. Analysts expected 96 cents per share.
But most of the improved profit came as the company cut costs and recorded lower integration costs for acquisitions. The company acquired the Folger’s brand from Procter & Gamble in 2008.
Smucker’s revenue was nearly flat at $1.05 billion. That’s just shy of the $1.07 billion expected by analysts surveyed by Thomson Reuters.
Janney Capital Markets analyst Mitchell B. Pinheiro told investors in a research note that Friday’s results were in line with forecasts.
“(Its) portfolio is well-positioned for the current economic environment, and we expect the company to show improving volume and pricing gains throughout (the year),” he wrote.
Smucker, based in Orrville, Ohio, said it now expects full-year revenue to rise slightly more than the 3 percent it forecast.
The company has performed well during the recession, relying on the popularity of its pantry among people looking to save money by eating cheap meals at home.
The Folgers acquisition has helped drive most of the company’s recent growth. But Smucker is seeing greater competition for those foods. And in the first quarter, sales and profit for its oil and baking division, which includes Pillsbury and Crisco, fell as competitors discounted prices.
And Smucker’s coffee revenue has slipped on this tough competition and higher ingredient costs. The company raised its prices on coffee twice during the quarter to offset higher bean prices and other costs. Coffee futures prices spiked in mid-June and have remained high.
The increased prices led the company to increase its coffee profit by only 1 percent in the first quarter, though sales rose 7 percent.
Smucker shares rose $1.69, or 2.9 percent, to $59.72 in midday trading Friday.
