J. M. Smucker Q1 Profit Up, Sales Down; Backs FY17 EPS View, Cuts Sales Forecast

(RTTNews) - J. M. Smucker Co. (SJM), a branded food and beverage products company, reported Tuesday higher profit in its first quarter of fiscal 2017, while sales declined on divestment and weak prices. Further, the company maintained its forecast for fiscal 2017 earnings, but trimmed sales view.

In pre-market activity on the NYSE, shares were losing 3.38 percent to trade at $150.95.

For the first quarter, net income grew 25 percent to $170 million from last year's $136.4 million. Earnings per share climbed 28 percent to $1.46 from $1.14 a year ago.

Adjusted earnings per share were $1.86, compared to $1.60 last year, reflecting incremental synergy realization, a lower tax rate, and fewer shares outstanding.

On average, 12 analysts polled by Thomson Reuters expected earnings of $1.74 per share for the quarter. Analysts' estimates typically exclude special items.

Synergy realization was $32 million in the first quarter as the company remains on track to achieve $100 million of incremental synergies in fiscal 2017.

Operating income improved 10 percent to $293.8 million and adjusted operating income grew 2 percent to $364.0 million. Selling, distribution, and administrative expenses decreased 8 percent.

Gross profit, meanwhile, decreased 1 percent, reflecting lower net pricing and the loss of U.S. canned milk profits.

Net sales decreased 7 percent to $1.82 billion from last year's $1.95 billion, reflecting the impact of the divested U.S. canned milk business and price declines. Analysts expected net sales of $1.89 billion for the quarter.

The prior results included the Company's former U.S. canned milk business, which was divested on December 31, 2015.

Excluding the divested business and foreign currency exchange, net sales decreased 5 percent.

CEO Mark Smucker said, "We are pleased with the start to our fiscal year as we delivered record first quarter earnings per share, which exceeded our expectations. Despite the impact of deflation on the top line, we remain on track to achieve our original expectations for full-year earnings per share."

Further, the company continues to expect full-year adjusted earnings per share in a range from $7.60 to $7.75. Analysts expect earnings of $7.70 per share.

Meanwhile, comparable net sales for the full year is now expected to be flat to down 1 percent, compared to previous estimate of a growth of 1 percent, excluding the impact of the divestiture. The change in sales guidance is based on a reduced net sales forecast for U.S. Retail Pet Foods.

Reflecting the U.S. canned milk divestiture, net sales are expected to decrease in the range of 2 percent to 3 percent from fiscal 2016.

However, the corresponding decrease in profit would be offset by input cost decreases for U.S. Retail Consumer Foods.