ORRVILLE, Ohio – The J. M. Smucker Company yesterday (Nov. 12, 2014) announced preliminary results for the second quarter ended October 31, 2014, and updated its 2015 fiscal year outlook.
The Company expects second quarter net sales to decrease 5 percent in fiscal 2015, compared to 2014. Income per diluted share excluding certain items affecting comparability is anticipated to be $1.53 for the second quarter of 2015, consistent with 2014. Net income per diluted share is expected to be $1.55 for the second quarter of 2015, compared to $1.46 for the second quarter of 2014.
The Company’s second quarter results were significantly impacted by volume declines in its U.S. Retail Coffee segment. Coffee segment volume and net sales in the second quarter of 2015 are expected to reflect a decrease of approximately 18 percent and 10 percent, respectively, compared to 2014.
The Company cited this was driven by a 20 percent decrease in volume for its Folgers brand, due primarily to consumer response to higher promoted price points for its roast and ground coffee offerings in the second quarter as compared to the first quarter of this fiscal year. Increased pricing was driven by higher green coffee costs.
The Company stated reduced promotional effectiveness and competitive activity also contributed to the declines. Segment profit is anticipated to decrease 16 percent for the U.S. Retail Coffee segment during the second quarter of 2015, compared to 2014.
“Our second quarter fell short of expectations primarily driven by our coffee business. Our rapid ascent of coffee prices to reflect higher green coffee costs took its toll on volume. The balance of our businesses performed well,” commented Richard Smucker, Chief Executive Officer.
“As we move into the second half, we anticipate overall coffee volume trends will improve compared to our second quarter, but the pricing impact of higher green coffee costs will continue through the remainder of the fiscal year. Looking forward, we do not believe there has been a fundamental change to the at-home coffee category. However, our teams will continue to focus on tactical opportunities to address the current market environment.”
For the full year outlook for the fiscal year ending April 30, 2015, the Company now expects net sales to decrease approximately 1 percent, compared to 2014. Income per diluted share excluding certain items affecting comparability is expected to be in the range of $5.45 to $5.65.
The Company previously projected net sales growth of 3 to 4 percent, compared to 2014, and income per diluted share excluding certain items affecting comparability to be in the range of $5.95 to $6.05.
The updated outlook reflects the Company’s revised expectations for its U.S. Retail Coffee segment in fiscal 2015, including lower volume and an unfavorable relationship between price realization and green coffee costs during the last six months of fiscal 2015, compared to the same period a year ago.
The Company’s U.S. Retail Consumer Foods and International, Foodservice, and Natural Foods segments currently remain on track to achieve full-year segment profit growth, generally in-line with prior expectations.
As previously announced, the Company will release its second quarter results the morning of Wednesday, November 19, 2014, and conduct its second quarter fiscal 2015 earnings call and webcast that day at 8:30 a.m. Eastern Time.
