ORRVILLE, OHIO — An impairment charge in the company’s pet food business, coupled with supply chain disruptions and cost inflation, has led to lower JM revenue. Smucker Co. in the third quarter of fiscal 2022.
Net income for the period ended Jan. 31 fell 73% to $69.7 million, or 64¢ on common stock, down sharply from $261.5 million, or $2.32 per share. share, at the same period a year ago. Fiscal 2022 results were impacted by a $150.4 million impairment charge related to the Rachael Ray Nutrish brand.
Quarterly sales increased from $2.077 billion to $2.057 billion.
During the quarter, JM Smucker completed the sale of its private label dry pet food business and its natural beverage and cereal businesses.
“We are pleased to report that our third quarter results exceeded our expectations, reflecting the strength of our brands, our excellence in execution and our ability to successfully pivot in response to a dynamic operating environment,” said Mark. T. Smucker, President. and CEO, prepared remarks on the company’s financial results on March 1. “While macroeconomic conditions remain volatile as supply chain disruptions and cost inflation persist, our teams continue to navigate a challenging environment, manage the factors within our control and deliver exceptional results. We continue to see strong demand for our brands that consumers love and trust, and we’re taking meaningful steps to maintain that momentum over the long term.”
U.S. consumer food retail unit sales decreased 3.3% to $433.1 million from $447.6 million in the third quarter of Fiscal 2021. Excluding $31.7 million of non-comparable net sales from the prior year related to the divested Crisco business, net sales increased 4%, Smucker said. Segment profit fell 10.3% to $99.5 million from $110.9 million, also partly reflecting the disposal of the Crisco business.
During a conference call with analysts on March 1, Smucker said the company’s Uncrustables business recorded its 31st consecutive quarter of growth. Uncrustables sales increased 30% in the quarter to approximately $120 million, and the brand now accounts for nearly 25% of Smucker’s Consumer Foods total business.
“We basically hit our $0.5 billion sales target more or less a year early,” Smucker said. “So on a 12-month run rate basis, we’ve already met that target. …We’re adding capacity in Colorado and we’ve groundbreaking the facility in Alabama, which will be a few years before it’s online. But the investments we are making in capacity will clearly support increased demand. And we are confident that we will continue to see double-digit growth.
“And really, capacity is the only constraint. If you think about the demand, the drop in household penetration, the fact that we haven’t fully unlocked new channels or parts of our out-of-home channel. Canada is a region that will come online at some point in the future. And then, of course, marketing. We also haven’t enabled marketing for Uncrustables. So there are a lot of tailwinds that we see going forward. And our focus right now is just to continue to make sure we’re increasing capacity as quickly as possible to support double-digit growth. »
Sales for Smucker’s US Retail Coffee business unit increased 5.7% in the quarter to $661.8 million from $625.9 million a year earlier. Segment profit increased 1.2% to $213.4 million from $210.7 million.
“Our brands gained nearly a dollar share point in the quarter, more than double that of any other manufacturer,” Smucker said. “We outperformed the category in all segments, including mainstream, premium, single cup and instant. Growth was led by Dunkin’ and Café Bustelo, the fast-growing home coffee brands, with on-the-go sales up 12% and 15%, respectively.”
Sales fell 9.4% to $696.6 million at Smucker’s largest business unit, US Retail Pet Foods, from $768.6 million a year ago. Segment profit also declined, falling 29% to $95.7 million from $135.1 million. The decrease mainly reflects higher raw material, manufacturing and transportation costs and lower volume/mix contribution, partially offset by higher net prices.
“Our pet food business continues to be impacted by supply chain disruptions, primarily for wet food and pet packaging,” Smucker said. “We are strategically allocating the sourcing and production of our most profitable items, including our leading cat food brand Meow Mix. While we continue to take steps to ease supply constraints, we expect these isolated supply issues to persist in the near term. »
Smucker said its full-year net sales are expected to decline about 1.5% to 0.5% from a year earlier, down from a previous forecast of 1% to 0%. . Adjusted earnings per share guidance was also lowered from $8.35 to $8.65, down from an earlier guidance of $8.35 to $8.75.