The J. M. Smucker Co., owner of Folgers and other consumer products, announced results for the fourth quarter and fiscal year ended April 30, 2011.
Non-GAAP income per diluted share was $1.00 and $1.07 for the fourth quarters of 2011 and 2010, a decrease of 7 percent, and $4.69 and $4.37 for the years ended April 30, 2011 and 2010, an increase of 7 percent, respectively.
Non-GAAP income per diluted share excludes restructuring and merger and integration costs of $0.18 and $0.06 per diluted share, in the fourth quarters of 2011 and 2010, and $0.64 and $0.22 in the years ended April 30, 2011 and 2010, respectively.
Results for the fourth quarter of 2010 benefited from a $12.9 million gain on the company's March 2010 divestiture of potato products and a significantly lower effective tax rate.
"Our long-term focus and strategy of owning and marketing leading brands have allowed us to deliver another year of strong sales and earnings," said Tim Smucker, chairman of the board and co-chief executive officer in a prepared statement. "We are gratified to have achieved these results in a challenging operating environment. Our ongoing success provides opportunities to return value to our shareholders. During the year, we repurchased over four percent of our outstanding common shares and increased the dividends paid by 17 percent. Total shareholder return for 2011 exceeded 25 percent reflecting the impact of these actions."
"As we begin the new fiscal year, we remain focused on building our brands while navigating through this period of commodity cost volatility," added Richard Smucker, executive chairman and co-chief executive officer. "We continue to demonstrate our ability to effectively manage these challenges while providing value to our consumers. With a number of key initiatives and new products planned for 2012, along with contributions from the recently acquired Rowland Coffee Roasters brands, we are confident in providing full year earnings per share guidance that is consistent with our stated long-term growth objectives."
Net sales in the fourth quarter of 2011 increased $118.1 million, or 11 percent, compared to the fourth quarter of 2010, as the net impact of price realization contributed approximately 8 percent of the overall increase. Volume increased 2 percent as gains were realized in the majority of our brands including Pillsbury® baking mixes and frostings, Jif® peanut butter, Folgers® coffee, Crisco® oils, Bick's® pickles, and Smucker's® fruit spreads. The overall impact of sales mix and foreign exchange rates was favorable.
Gross profit decreased $9.1 million in the fourth quarter of 2011, compared to 2010, as the increase in net sales was offset by overall higher raw material and freight costs and an additional $11.8 million of special project costs included in cost of products sold. Excluding special project costs, gross profit increased $2.7 million, or 1 percent. Costs were significantly higher for green coffee and soybean oil. As expected, price increases taken throughout the year to offset higher commodity costs were realized and contributed to incremental gross profit, but did not generate margin expansion. Gross margin declined from 40.6 percent in the fourth quarter of 2010, to 36.8 percent in the fourth quarter of 2011, excluding special project costs. Gross margin was also impacted by price declines in effect on Crisco® oils during the first half of the quarter, despite higher costs.
Selling, distribution, and administrative expenses in the fourth quarter of 2011 decreased 3 percent, compared to 2010, and decreased as a percentage of net sales from 21.5 percent to 18.8 percent. Marketing expenses for the fourth quarter of 2011 decreased 14 percent, compared to the same period in 2010 that included significant levels of advertising investments. Selling, distribution, and general and administrative expenses all increased between 2 percent and 4 percent, significantly less than the percentage increase in net sales.