ORRVILLE, OHIO — Net income of The J.M. Smucker Co. in the second quarter ended Oct. 31 was $153.4 million, equal to $1.46 per share on the common stock, up 3% from $148.8 million, or $1.36 per share, in the same quarter in 2013. Net sales were $1,559.9 million, down 4% from $1,628.7 million.
Excluding special items, such as special project costs, income was up 1%.
Vince Byrd, president and chief operating officer, said Smucker’s staying true to its long-term strategy continues to drive the business forward.
“Creating consumer value through product innovation, offering the highest quality and broadest variety of products with the backing of great marketing and merchandising, and doing so at fair consumer prices, has time and again proven to be a winning formula,” Mr. Byrd said. “The benefit of lower commodity costs has provided us with the flexibility to further support our value proposition. We believe we have this combination solidly in place for the holiday season and beyond.”
In its outlook for fiscal 2014, Smucker maintained its forecast of earnings per share at $5.72 to $5.82. Net sales, though, now are expected to decrease about 2%, which compared with an earlier forecast decline of 1%.
The U.S. Retail Consumer Foods segment, Smucker’s largest measured by sales and second largest measured by profit, had operating profit of $99.2 million in the second quarter, down 11% from the same period last year. Sales were $612.6 million, down 1%.
Volume trends were flat across the segment, with gains of 2% for Jif brand versus the second quarter of fiscal 2013; 25% for Uncrustables frozen sandwiches; 4% for Crisco; and 4% for Smucker’s fruit spreads. Volume for Pillsbury flour, frosting and bakery mixes decreased 2%, and canned milk fell 8% during the quarter.
Commenting on the lower profits for the segment, the company said, “Commodity costs in the segment were modestly lower in the second quarter of 2014, compared to 2013, as declines in peanut costs were mostly offset by higher milk costs. However, overall lower net price realization primarily related to peanut butter and fruit spreads drove the U.S. Retail Consumer Foods segment profit decrease of $11.9 million, or 11%, in the second quarter of 2014, compared to the second quarter of 2013. Additionally, temporary incremental costs were incurred at the company’s new fruit spreads manufacturing facility along with capacity expansion costs at its Smucker’s Uncrustables facility during the second quarter of 2014. Unrealized mark-to-market adjustments on derivative contracts were a loss of $1.2 million in the second quarter of 2014, compared to a loss of $5 million in the second quarter of 2013. The company expects segment profit growth in the back half of its fiscal year as lower peanut costs are realized and manufacturing costs decrease.”
Operating profits of the U.S. Retail Coffee business were $180.6 million in the second quarter, up 14% from $158.2 million in the same period last year. Sales were $594.9 million, down 4%.
Volume in the quarter rose 2% from the same period in fiscal 2013, with Folgers brand volume up 1% and Dunkin’ Donuts packaged coffee sales up 11%. The sales decline reflected a price cut of about 6% taken in February 2013. K-Cup sales were flat during the quarter. Net sales of Folgers Gourmet Selections K-Cup packs increased 9% during the quarter, offset by a decrease in Millstone branded offerings.
For the six months ended Oct. 31, net income at J.M. Smucker was $280 million, or $2.65 per share, up 8% from $259.7 million, or $2.36 per share, in the same period a year ago. Net sales were $2,910.8 million, down 3% from $2,998.4 million.