J.M. Smucker Co.
Oct. 1, 2012
Introduction of a large number of new products, precise pricing, be it higher or lower, infrastructure improvements and targeted acquisitions: These are strategies that The J.M. Smucker Co., Orrville, Ohio, believes will deliver continued growth for the remainder of fiscal year 2013.
The company plans to introduce a record number — about 100 — of new products in the current 2013 fiscal year. The upcoming new products are expected to produce revenues that will build on 2012’s 15% gain in net sales. Smucker has forecast net revenues in fiscal 2013 to rise about 7% from the previous year. In the 2013 first quarter ended July 31, 2012, Smucker’s net sales increased 15% compared to the same quarter a year ago.
The company plans to expand Smucker’s line of single-serve coffee, baking, hazelnut spreads and seasonal items. The company has high hopes for its new Jif hazelnut spreads, said Vince Byrd, Smucker’s chief operating officer.
“Just for perspective the (spreads) category represents about $275 million in sales,” he said. “ It’s grown nearly 50% over the last 52-week period, and actually has grown significantly more than that in the last 12-week period, which has been fueled by our launch.”
Mr. Byrd said Smucker is nearing completion on a $70 million expansion of two coffee facilities in New Orleans that was two years in the making.
“We’re pleased with the solid start to the fiscal year with growth in volume, sales and cash flow,” said Richard Smucker, chief executive officer. “While the environment remains challenging, we continue to drive long-term growth through brand-building, product innovation, acquisitions and productivity initiatives while maintaining a healthy balance between volume, market share and profitability. Our results demonstrate the strength and resiliency of our iconic brands, our ability to adjust rapidly in the marketplace and commitment of our team to our strategy.”
Gains in company sales led Smucker’s board of directors to increase the quarterly dividend to 52c per share from 48c, an increase of about 8%. Mr. Smucker said the increase was a vote of confidence in the long-term growth potential of the company.
Despite the increase in net sales, the first quarter of fiscal 2013 brought higher expenses and commodity prices, which contributed to a decline of 1% in income. As a result, margins contracted from 37.1% in the first quarter of 2012 to 34.6% in the first quarter of 2013, the company said. At the same time, the acquisition of the Sara Lee Corp.’s food service business was credited with adding a boost to the business.
Acquisitions and product innovation have been cornerstones of J.M. Smucker’s strategy for growing the company over the last decade. Fiscal year 2012 saw Smucker acquire the North American food service coffee and hot beverage business of Sara Lee Corp. and Rowland Coffee Roasters, Inc., which has coffee brands that are popular in the Hispanic marketplace in Café Bustelo and Café Pilon. The company looks forward to building a larger customer base of Hispanic consumers. Other goals for fiscal 2013 articulated by the company include supply chain optimization and building sustainability initiatives, especially in its coffee products.