ORRVILLE, Ohio, Feb. 13, 2015 /PRNewswire/ -- The J. M. Smucker Company (NYSE: SJM) today announced results for the third quarter ended January 31, 2015, of its 2015 fiscal year. Results for the quarter and nine months ended January 31, 2015 and 2014, include the operations of Sahale Snacks, Inc.("Sahale") since the completion of the acquisition on September 2, 2014, Enray Inc. ("Enray") since the completion of the acquisition on August 20, 2013, and the impact of the Company's licensing and distribution agreement with Cumberland Packing Corp. ("Cumberland"), which commenced on July 1, 2013.
Executive Summary
- Third quarter net sales decreased 2 percent in 2015, compared to 2014, reflecting decreased volume, most significantly in the U.S. Retail Coffee segment.
- Operating income excluding the impact of restructuring and merger and integration costs and unallocated derivative gains and losses ("certain items affecting comparability") decreased 8 percent in the third quarter of 2015, compared to 2014, attributed to the impact of a decline in gross profit, driven by the U.S. Retail Coffee segment.
- Income excluding certain items affecting comparability also decreased 8 percent in the third quarter of 2015, compared to 2014.
- Third quarter income per diluted share excluding certain items affecting comparability decreased 6 percent in 2015, compared to 2014, and benefited from the Company's share repurchase activities during the fourth quarter of fiscal 2014 which reduced weighted average shares outstanding by 3 percent.
U.S. Retail Coffee
The U.S. Retail Coffee segment net sales decreased 1 percent in the third quarter of 2015, compared to the third quarter of 2014, as lower volume was mostly offset by higher net price realization, reflecting list price increases taken during fiscal 2015, and favorable sales mix. List price increases taken include 9 percent in June 2014 on the majority of the Company's packaged coffee offerings, and 8 percent in January 2015 on its K-Cup packs. Segment volume decreased 8 percent in the third quarter of 2015, compared to the third quarter of 2014, primarily driven by the Folgers brand. The Folgers brand volume decline was attributed to consumer response to higher promoted price points on shelf for its roast and ground coffee offerings, competitive activity, and reduced promotional effectiveness. The Dunkin' Donuts® packaged coffee volume was flat in the quarter, and the Cafe Bustelo brand volume increased 5 percent. Volume and net sales of Keurig portion packs decreased 3 percent and 8 percent, respectively, in the third quarter of 2015, compared to the third quarter of 2014, primarily driven by the Millstone K-Cup packs.
The U.S. Retail Coffee segment profit decreased $30.6 million, or 17 percent, in the third quarter of 2015, compared to the third quarter of 2014, reflecting lower sales volume and the impact of higher costs, which were not fully offset by higher net prices. The unfavorable price to cost relationship was driven by increased promotional spending in support of the Company's K-Cup packs and its Dunkin' Donuts packaged coffee. A reduction in marketing expenses contributed favorably to segment profit in the third quarter of 2015, compared to 2014.
U.S. Retail Consumer Foods
The U.S. Retail Consumer Foods segment volume increased 1 percent in the third quarter of 2015, compared to the third quarter of 2014. Segment net sales decreased 2 percent in the third quarter of 2015, compared to 2014, driven by lower net price realization primarily for the Jif and Crisco brands. The Sahale business contributed $10.3 million to segment net sales in the third quarter of 2015.
Jif brand volume increased 7 percent and net sales decreased 4 percent, in the third quarter of 2015, compared to the third quarter of 2014, due to a 7 percent list price decrease on the majority of peanut butter items in November 2014 and increased promotional spending. Smucker's Uncrustables frozen sandwiches were up 10 percent in both volume and net sales. Volume of Smucker's fruit spreads increased 2 percent while net sales were flat. Crisco brand volume increased 1 percent as gains in oils offset declines in shortening, while net sales decreased 10 percent, impacted by a 9 percent list price decline taken in the fourth quarter of 2014. Volume for the Pillsbury brand was flat and net sales decreased 3 percent.
The U.S. Retail Consumer Foods segment profit increased $9.4 million, or 9 percent, in the third quarter of 2015, compared to the third quarter of 2014, reflecting a decrease in marketing expense, favorable mix, and higher volume. Overall lower commodity costs, primarily for peanuts and oils were more than offset by lower net price realization which included increased promotional spending in the period. Sahale contributed modestly to segment profit in the third quarter of 2015. View full report here.
