ORRVILLE, OHIO — Disappointing volume led to lower earnings at the J.M. Smucker Co. in the third quarter ended Jan. 31, as net income fell 11% to $116,844,000, equal to $1.03 per share on the common stock, down from $131,995,000, or $1.12 per share, in the same period a year ago.
Sales for the quarter, though, rose 12% to $1,467,641,000 from $1,312,351,000. Smucker said the addition of the Rowland Coffee brands and Sara Lee food service coffee and hot beverage business earlier this year contributed $33 million and $26.9 million, respectively, to net sales in the third quarter.
Overall volume declined 10% during the quarter, driven by Crisco shortening and oils, Folgers coffee and Jif peanut butter. Shipments measured by unit were down 8%.
“Although sales increased 12% for the quarter, we were disappointed with overall volume and its impact on earnings,” said Vince Byrd, president and chief operating officer. “Despite having strong merchandising programs in place for the holiday period, our volume was lower than expected as a result of our higher price points coupled with lower consumer demand across the food industry.
“Looking forward, we are encouraged that our share of market remains strong and that commodity costs are moderating, providing opportunities to adjust pricing and promotional activities to better meet the needs of our consumers.”
Operating profit within J.M. Smucker’s U.S. retail coffee business fell 12% to $138.3 million, down from $158.1 million in the same period a year ago. Sales increased 15% to $637.9 million.
“Volume declined for the Folgers brand in line with the overall segment in the third quarter of 2012, compared to 2011, and was primarily attributed to consumer response to higher price points on shelf and aggressive private label price points at key retailers,” Smucker said. ”Dunkin’ Donuts packaged coffee volume was up 4%. Contributing to favorable sales mix in the third quarter of 2012, net sales of Folgers Gourmet Selections and Millstone K-Cups increased $38.2 million, compared to the third quarter of 2011, and represented 7 percentage points of segment net sales growth, while contributing only 1 percentage point growth to volume.”
The U.S. retail consumer foods unit posted operating profit of $106.6 million, up 4% from $102.2 million in the same period a year ago. The company attributed the gain to pricing actions, benefitting primarily from timing related to peanut butter. Smucker said it expects peanut costs to be significantly higher in the fourth quarter than in the third quarter of fiscal 2012 as inventory of lower-cost peanuts is depleted. Net sales for the quarter rose 7% to $556.5 million from $518.5 million.
Operating profit in the International, Foodservice, and Natural Foods segment increased 31% to $39 million, up from $29.9 million. The most recent quarterly results included an $11.3 million loss on the sale of the Europe’s Best business and an impairment charge of $17.2 million. Sales also finished higher, increasing 14% to $273.2 million from $239.2 million.
Overall, for the nine months ended Jan. 31 net income totaled $355,614,000, or $3.12 per share, down 8% from $384,602,000, or $3.23 per share, in the same period of fiscal 2011. Net sales for the nine months were $4,170,429,000, up 15% from $3,638,429,000.
The company lowered its outlook for the year. Income per diluted share, excluding special project costs of 65c to 70c per diluted share, is expected to be in a range of $4.60 to $4.65, down from the company’s previous estimate of $4.90 to $5.