J.M. Smucker Co. believes it has put its higher peanut costs behind, putting the maker of Jif on a path to grow its peanut butter business. Company executives in a June 5 conference call with analysts cited some of the company’s specialty alternative Jif line extensions as a driving force behind a 6% increase in segment operating profit in J.M. Smucker’s U.S. Retail Consumer Foods unit in the fourth quarter of fiscal 2014. More success is expected in fiscal 2015.
Richard Smucker, chief executive officer, told analysts during the call that the marketplace is experiencing an emphasis on plant-based protein.
“A lot of companies are focusing on that area and peanut butter is probably the largest plant-based protein in the marketplace,” Mr. Smucker said. “And so, I think we will continue to get some benefit from that. And our acquisition of Enray foods and the quinoa leadership that they have is another plant-based protein that we are riding on in the health food area. So we are excited about being in those categories.”
Paul Smucker Wagstaff, president of U.S. Retail Consumer Foods, added that Smucker is well-positioned from a competitive standpoint, both in variety and in cost.
“When you look at some of the innovation that we have coming out in (the peanut butter business), we have Jif Dippers, which is a snack type item, and we know snacks is a growing, growing category and the segment is doing well,” he said. “Our Jif Whips continue to do well and we are pleased with that. The Jif Hazelnut, we are re-launching that product in a plastic jar at a similar size to our competition, we are investing behind all of these.
“So, we feel very good and comfortable with our peanut butter business and where it is heading in the fiscal year coming up.”
Earlier this year, Smucker said it would invest an additional $40 million in a peanut butter plant in Memphis, Tenn. Construction at the site is under way, and the plant is expected to be producing peanut butter by the fourth quarter of fiscal 2015, Mr. Smucker Wagstaff said.
Also contributing to the U.S. Retail Consumer Foods unit profit during the fourth quarter was Uncrustables. Nets sales of the frozen sandwiches increased 16% during the quarter, while volume rose 23%. Meanwhile, brand volume in Crisco increased 20% during the quarter, but sales fell 5%, dragged down by a 9% list price increase taken during the quarter and higher promotional expense.
Overall, segment profit for the U.S. Retail Consumer Foods segment was $95.7 million in the fourth quarter ended April 30, up from $90.2 million in the same period a year ago. Sales eased 4% to $465.8 million from $485.8 million. For the full year, operating profit was $396.9 million, down 4% from $415.3 million, while sales fell 2% to $2,172.6 million from $2,214.8 million.
Lower net price realization more than offset the benefit of lower green coffee costs in the fourth quarter as segment operating profit in Smucker’s U.S. Retail Coffee unit decreased 10% to $133 million from $147.7 million. Sales also were lower, falling 12% to $473.5 million from $535.5 million. For the full year, the segment posted profit of $641.9 million, up 6% from $607.5 million a year ago, while sales fell 6% to $2,161.7 million from $2,306.5 million.
Net income at J.M. Smucker in the year ended April 30 was $565.2 million, equal to $5.42 per share on the common stock, up 4% from $544.2 million, or $5 per share, in fiscal 2013. Net sales totaled $5,610.6 million, down 5% from $5,897.7 million.
