Daily Coffee Report 8/10/26
Daily coffee report
StoneX Coffee Team
- Coffee
The J.M. Smucker Co. Announces Fiscal 2022 Second Quarter Results, Coffee Sales Rise
By: Alexis Rubinstein, Managing Editor - Coffee Network
The J.M. Smucker Co. Announces Fiscal 2022 Second Quarter Results, Coffee Sales Rise
CoffeeNetwork (New York) - The J.M. Smucker Co. (NYSE: SJM) announced results for the second quarter ended October 31, 2021, of its 2022 fiscal year.
EXECUTIVE SUMMARY
- Net sales increased $16.0 million, or 1 percent. Net sales excluding divestitures and foreign currency exchange increased 8 percent.
- Net income per diluted share was $1.90, a decrease of 6 percent. Adjusted earnings per share was $2.43, an increase of 2 percent.
- Cash from operations was $165.1 million, a decrease of 56 percent. Free cash flow was $105.9 million, compared to $326.3 million in the prior year.
Net sales increased 1 percent. Excluding noncomparable net sales in the prior year of $135.7 million for the divested Crisco® and Natural Balance® businesses, as well as $5.6 million of favorable foreign currency exchange, net sales increased $146.1 million, or 8 percent.
The increase in comparable net sales was due to favorable volume/mix and higher net price realization for each of the Company's U.S. Retail segments and for International and Away From Home.
Gross profit decreased $106.7 million, or 13 percent, reflecting higher costs, primarily driven by increased commodity, manufacturing, transportation, and packaging costs, and the noncomparable impact of the Crisco® and Natural Balance® divestitures, partially offset by increased pricing and favorable volume/mix. Operating income decreased $69.0 million, or 18 percent, primarily driven by the decrease in gross profit, partially offset by a $35.1 million decrease in selling, distribution, and administrative ("SD&A") expenses.
Adjusted gross profit decreased $55.8 million, or 7 percent, with the difference from generally accepted accounting principles ("GAAP") results being the exclusion of the change in net cumulative unallocated derivative gains and losses and special project costs. Adjusted operating income decreased $20.9 million, or 5 percent, further reflecting the exclusion of amortization and other special project costs.
The pandemic and related implications, along with cost inflation and volatility in supply chains, continue to impact financial results and cause uncertainty and risk for the fiscal year 2022 outlook. Any manufacturing or supply chain disruption, inclusive of any labor shortages, whether related to illness, vaccine requirements, or other factors, as well as changes in consumer mobility and purchasing behavior, retailer inventory levels, and macroeconomic conditions could materially impact actual results. While the broader outlook remains uncertain, the Company continues to focus on managing the elements it can control, including taking the necessary steps to minimize the impact of cost inflation and any business or labor disruption. This guidance reflects performance expectations based on the Company's current understanding of the environment.
Net sales are expected to range from down 0.5 percent to up 0.5 percent compared to the prior year, which incorporates an impact of $355.6 million related to the divested Crisco® and Natural Balance® businesses. On a comparable basis, net sales are expected to increase approximately 4.5 percent at the mid-point of the net sales guidance range, reflecting a deceleration in at-home consumption trends, more than offset by higher net pricing across multiple categories, continued double-digit net sales growth for the Smucker's® Uncrustables® brand, and a recovery in away from home channels. The increase in net sales guidance reflects stronger than anticipated demand in the second quarter and remainder of the year, as well as incremental net pricing actions in the remainder of the fiscal year in response to higher costs.
Adjusted earnings per share is expected to range from $8.35 to $8.75, based on 108.3 million shares outstanding. The earnings guidance reflects the updated net sales outlook, adjusted gross profit margin to range from 35.0 to 35.5 percent, and SD&A expenses down approximately 7 percent compared to the prior year. The adjusted effective income tax rate is expected to be 24.0 percent, and free cash flow is expected to be approximately $700 million, with capital expenditures of $400 million.
U.S. Retail Coffee
Net sales increased $50.4 million. Volume/mix increased net sales by 5 percentage points, driven by the Dunkin'® and Café Bustelo® brands. Net price realization increased net sales by 3 percentage points, primarily reflecting list price increases and trade spend reductions for roast and ground products.
Segment profit increased $5.7 million, primarily reflecting higher net pricing and the increased contribution from volume/mix, partially offset by higher commodity costs.
Alexis Rubinstein
- Coffee
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