JM Smucker said it expects revenue growth to slow in its current fiscal year as it reported lower prices for its coffee and peanut butter products that led it to fall short of its own guidance for net sales in 2019.
The miss on net sales for the fourth quarter and fiscal year 2019, as its traditional business units struggled, came despite the food and beverage company enjoying a boost from last year’s $1.9bn acquisition of Ainsworth Pet Nutrition, which increased its exposure to the faster-growing pet food market.
JM Smucker, best known for its eponymous jams and Jif peanut butter, expects net sales to rise 1 per cent to 2 per cent this year. That compares with a 7 per cent increase in 2019 to $7.8bn, which fell short of the company’s own forecast (which it downgraded six months ago) of $7.9bn.
Adjusted earnings are expected to come in the range of $8.45 to $8.68 a share, versus the $8.29 a share it reported for 2019, which was up 4 per cent from a year ago and took into account the effect of the Ainsworth acquisition as well as the sale of its US baking business. That exceeded the top end of the company’s own guidance range by 9 cents, and was also higher than the median forecast of $8.12 among analysts in a survey by Refinitiv.
The Ohio-based group has faced similar industry pressures to that of its rivals, including increased competition for shelf space in consumers’ pantries, as well as input costs.
The company said “lower price realization, primarily in coffee and peanut butter, impacted net sales by 3 percentage points” during its fourth quarter, which were still up 7 per cent from a year ago to $1.9bn. The upshot was that this was mostly offset by favourable volume/mix “as the lowered price points resulted in volume gains in their respective categories.”
In both the fourth quarter and through 2019, the company’s retail coffee, retail consumer foods and international segments saw both net sales and profits decline from 12 months ago. The pet foods segment, which makes up a leading 37 per cent of net sales, reported year-on-year increases in both net sales and profit thanks primarily to the Ainsworth acquisition.
JM Smucker shares were steady in premarket trade, leaving them up 34 per cent so far this year.
