The J. M. Smucker Company SJM posted second-quarter fiscal 2018 results and earnings and revenues beat the Zacks Consensus Estimates. 

However, the company lowered the higher end of its earnings guidance for fiscal 2018, thanks to anticipated higher freight expenses and industry-wide headwinds for the remaining part of the fiscal year.  

We also note that in the past month the stock has gained 1.8%, as against the industry’s decline of 0.1%.

Quarter in Details

Adjusted earnings in the second quarter were $2.02 per share, which surpassed the Zacks Consensus Estimate of $1.89. However, earnings declined 1.5% year over year.

Net sales in the quarter increased 0.5% year over year to $1,923.6 million and also beat the consensus estimate of $1,895 billion. Sales during the quarter were favorably impacted by increased net pricing for peanut butter and Smucker’s brand. Lower volume/mix stemming from the decline in oil and baking category products were offset by gains from the pet food segment. Net sales received benefits of $5.4 million owing to favorable currency exchange.

Adjusted gross profit fell 1.5% to $746.2 million. Adjusted operating income for the reported quarter also declined 3.3% to $383.2 million. Gross margin and adjusted operating margin contracted 80 basis points to 38.8% and 19.9%, respectively.

J.M. Smucker Company (The) Price, Consensus and EPS Surprise

J.M. Smucker Company (The) Price, Consensus and EPS Surprise | J.M. Smucker Company (The) Quote

Segment Performance

U.S.Retail Coffee Market: The company’s largest segment, U.S. Retail Coffee Market, reported a 0.2% growth in sales to $552.7 million. This was mainly due to a modest rise in net price realization. Also, lower volume/mix from the Folgers brand was majorly offset by gains reaped from the Dunkin’ Donuts and Café Bustelo brands.

Segment profit declined 18.2% to $152.6 million, due to higher costs of green and unfavorable volume/mix impacts.