J.M. Smucker 3rd-quarter profit leaps thanks to continued benefits from Folgers buy

Folgers boosts J.M. Smucker 3rd-quarter profit

PORTLAND, Ore. — J.M. Smucker Co.’s third-quarter got a jolt from its Folgers coffee business, which helped the food maker nearly double its profit on strong sales.

Smucker has been successful with its a recession-friendly lineup of food staples such as Jif peanut butter, Pillsbury frosting and its namesake jellies and jams as consumers began eating at home more often. But its $3 billion acquisition of Folgers Coffee from Procter & Gamble Co. more than a year ago has been the major driver in its recent profit gains.

The company’s revenue grew 3 percent for the quarter to $1.21 billion. Folgers accounted for $510.3 million of those sales.

J.M. Smucker executives said the coffee business, which includes Folgers and Dunkin’ Donuts brands, has exceeded its expectations as it has reached a full year of operation within the company.

Excluding the additional coffee sales and the impact of foreign exchange, sales decreased 2 percent for the quarter.

Smucker’s profit soared 74 percent to $135.5 million, or $1.14 per share, for the quarter. That’s up from $77.9 million, or 68 cents per share, earned in the same quarter of the prior year. Removing acquisition costs and other items, the company earned $1.17 per share.

The results beat analyst expectations for the Orville, Ohio-based company of $1.05 per share on revenue of $1.16 billion, according to Thomson Reuters. Analyst expectations typically exclude one-time items.

The company saw volume and sales gains across most of its brands, Executive Chairman and Co-CEO Richard Smucker said, and it expects that growth to continue. Those gains, however, were offset by lower prices and increased marketing spending as Smucker pushed to promote its products during the holiday baking season. That resulted in stronger sales in that category.

The company also plans to continue to expand its coffee business as it also announced a multiyear deal with Green Mountain Coffee Roasters Inc. to get into the fast-growing single-serve coffee business. Under the deal, Green Mountain will use Smucker’s coffee brands in packs that work with its single-cup Keurig brewing system. The terms of the deal were not disclosed.

The packs, called K-Cups, will start becoming available by fall.

Smucker lifted its earnings and revenue guidance for the year on the strong results. The company now expects an adjusted profit of $4.02 to $4.07 per share for the year, up from its prior guidance of $3.95 to $4.05 per share. The food company also lifted its sales forecast to a range of $4.5 billion to $4.6 billion, up from its previous forecast of $4.5 billion.

However, analysts expectations for profit remain higher at $4.09 per share on sales of $4.57 billion, which was below Wall Street’s profit expectations and sent shares down in trading.

Janney Capital Markets analyst Mitchell B. Pinheiro said in a research note that while the stock was reacting negatively, it remains fairly valued and reiterated a “Buy” rating.

He also noted that it was a strong quarter for Smucker and said the company’s Green Mountain Coffee agreement and strong cash position are among the company’s strengths.

Shares of Smucker fell $1.49, over 2 percent, to $58.62 in early afternoon trading.

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AP Business Writer Michelle Chapman contributed to this report from New York.