Food Business News - June 16, 2015 - (Page 22)

With charges, Smucker swings to loss Charges associated with pet food acquisition weigh on fiscal year performance ORRVILLE, OHIO - For the J.M. Smucker Co., 2015 was a year of significant change, which culminated in the largest acquisition in company history. The maker of Jif and Folgers swung to a loss in the fourth quarter, reflecting the impact of its March transaction for Big Heart Pet Brands and related financing expenses, as well as net sales declines in coffee. For the fiscal year ended April 30, Smucker had net income of $344.9 million, equal to $3.33 per share on the common stock, down 39% from $565.2 million, or $5.42 per share, in fiscal 2014. Net sales for the year increased 1% to $5,692.7 million, which compared with $5,610.6 million the year before. Results included a charge of $173.3 million in connection with the early redemption of debt. For the fourth quarter, Smucker reported a net loss of $90.3 million, which compared with net income of $118.5 million, or $1.16 per share, in the prior-year period. Net sales for the quarter totaled $1,447.1 million, up 17% from $1,234.3 million the year before. "The challenges we have spoken to over the past two quarters in our coffee business resulted in total company net sales and earnings-per-share performance falling short of our original expectations for the year," said Richard Smucker, chief executive officer, during a June 4 earnings call with financial analysts. "That said we still firmly believe coffee is a great category and expect to achieve mid-single-digit percentage segment profit growth in 2016." For fiscal 2016, executives expect to deliver approximately $8 billion in net sales, an increase of 40% over 2015, and earnings per share in the range of $5.65 to $5.80, which includes the realization of $25 million of synergies related to the Big Heart acquisition. On March 23 the company completed the transaction, valued at approximately $5.8 billion, including approximately $2.6 billion of net debt. Big Heart Pet Brands is the largest standalone producer, distributor and marketer of branded pet food and pet snacks in the United States with such brands as Meow Mix, Milk-Bone and Kibbles 'n Bits. "We enter fiscal 2016 as a larger, stronger and more diversified company, and we are excited about the opportunities that lie ahead," Mr. Smucker said. In the year ahead, Smucker is focused on integrating the pet food business and capitalizing on synergies 22 FOODBUSINESS NEWS ® Richard Smucker, chief executive officer, J.M. Smucker Co. and growth opportunities from the transaction; driving growth within its coffee business and the Jif, Smucker's and Uncrustables brands with marketing efforts to support continued innovation across key product lines; and working on capital efficiencies to meet deleveraging activities. Smucker expects to boost its coffee business with the recently announced partnership with Dunkin' Brands Group, Inc. and Keurig Green Mountain, Inc. to manufacture, market, distribute and sell Dunkin' K-Cup packs at retailers nationwide in the United States and Canada and on-line. "Our initial shipments began May 1, and we've been extremely pleased with the customer and consumer response to date," Mr. Smucker said. "We anticipate Dunkin' Donuts K-Cups will be a key driver of top- and bottom-line growth for our coffee segment in fiscal 2016." Net sales in the U.S. Retail Coffee segment declined 4% to $2,076.1 million for the year and 1% to $468.6 million for the quarter, due to lower volume that was mostly offset by higher net price realization and favorable sales mix. Segment profit fell 14% to $549.2 million for the year and 19% to $109.9 million for the quarter, driven by lower sales volume and the impact of higher green coffee costs. For the U.S. Retail Consumer Foods segment, net sales fell 3% to $2,104.8 million for the year and 8% to $427.5 million for the quarter, due to lower net price realization for Jif, Pillsbury and Smucker's brands. Segment profit increased 10% to $432.9 million for the year but dipped 5% to $87.3 million Smucker seeks growth with healthy innovation ORRVILLE, OHIO - In the fiscal year ahead, the J.M. Smucker Co. plans to launch more than 100 new products to meet consumer demand for simple ingredients, healthy snacks and convenience. Innovation has been a significant growth driver for the company, which said products introduced within the past three years contributed 7% of sales in fiscal 2015. "... in every given year, it's not about the number of new products that we want to launch; it's about making sure that we launch the right new products," said Mark Smucker, president of consumer and natural foods, during a June 4 earnings call. "So some years we may choose to focus on fewer bigger ideas." Smucker is betting big on Folgers Perfect Measures, which are premeasured tablets of 100% roast and ground coffee with no additives. Scheduled to ship this summer to select markets, the product is positioned as a more convenient and sustainable solution for consumers who use traditional coffee machines. esearch and "That's a concept that we've spent a lot of time and a lot of money in research development," said Steve Oakland, president of coffee and food service. "And we want to make sure that we get the right read on that. So the marketing spend, even though it's a lead market launch, will be at national weight levels... It will ship this summer, and if we get the results that we're hoping (for), we will roll it as quickly as we can." Snacking is another hotspot for the company, which is targeting the occasion across a June 16, 2015

Table of Contents for the Digital Edition of Food Business News - June 16, 2015

Food Business News - June 16, 2015
Wet weather affecting grain and oilseed markets
WhiteWave to acquire Vega Foods
Dairy Business News - Making salty cheese with less sodium
Table of Contents
Web Contents
Editorial - Expo Milano focuses on food science
The leading natural food trends of 2015
Wal-Mart building an ‘omnichannel’ presence
B&G Foods has big plans for Bear Creek soup brand
With charges, Smucker swings to loss
Smucker seeks growth with healthy innovation
Campbell to acquire fresh salsa maker
Hughes out as Boulder Brands c.e.o.
Private equity firm buys PopCorners brand
Subway commits to ingredient improvements
Washington - Resistance is futile
Health and Wellness - Clean label and the 'trust factor'
Ingredient Innovations - Pace picks up for pea protein power
Pick your plant-based protein
I.F.F. to stress flavors for protein sources
New Food Products
Ingredient Market Trends - House votes to repeal COOL
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - June 16, 2015