Smucker Earnings Slip Despite Surging Sales

J.M. Smucker Co. (SJM), the nation's top maker of jams and jellies, on Thursday said its fourth-quarter profit slipped despite a sharp rise in sales, as results were hurt by restructuring charges and costs from its acquisition of International Multifoods Corp.

The company also said fiscal 2006 earnings would miss Wall Street's expectations.

Profit for the quarter ended April 30 totaled $22.1 million, or 38 cents per share, down from $22.2 million, or 44 cents, the year before. Income from continuing operations amounted to $26.8 million, or 45 cents per share, the company said.

Setting aside merger and restructuring costs of 13 cents per share, adjusted earnings were 58 cents per share, beating by a penny the average estimate of analysts surveyed by Thomson Financial.

Sales totaled $491.5 million, up 57 percent from $312.4 million a year earlier but missing the $506 million in sales targeted by Wall Street analysts. Excluding the Multifoods businesses, sales were up 8 percent, Smucker said.

Last March, Smucker acquired Minneapolis-based International Multifoods (search), the maker of Pillsbury, Hungry Jack and other food brands, in a $500 million cash and stock deal. The Multifoods businesses contributed $154.1 million to sales in the fourth quarter of fiscal 2005.

"Once again, our Smucker's, Jif and Crisco brands experienced good sales growth in the quarter, and the addition of the brands we acquired from Multifoods enhanced our performance," Tim Smucker, chairman and co-chief executive, said in a prepared statement.

Full-year earnings were $129.1 million, or $2.24 per share, up from $111.4 million, or $2.21 per share, in 2004. Income from ongoing business — excluding charges — was $2.60 per share, while sales rose 49 percent to $2.04 billion, the company said.

On average, analysts were looking for a yearly profit of $2.60 per share on $2.06 billion in sales.

"We had a great year," Richard Smucker, president and co-CEO, said on a conference call with analysts. "The integration of the Multifoods' brands went extremely well. Our momentum is strong. We are determined to the long-term steady growth of our brands, our employees and our company."

He said the company intends to increase spending on marketing by 20 to 25 percent across all brands.

John M. McMillin, an analyst with Prudential Equity Group, said the results were, for the most part, in line with expectations.

Looking ahead, Smucker said it expects 2006 earnings to grow by 10 percent, or 8 percent on a per-share basis, implying a target of about $2.42 per share. Its estimate accounts for about 22 cents per share in charges, the company said.

Analysts are looking for 2006 income of $2.89 per share and sales of $2.25 billion.

Shares of Smucker fell 18 cents to $50.66 on the New York Stock Exchange (search).