Peanut butter and jelly maker J.M. Smucker Co. said on Friday quarterly profit rose a better-than-expected 42 percent, helped by the acquisition of dairy company Eagle Family Foods, lower restructuring costs and gross margin improvement.
The maker of Jif peanut butter and Smucker's jelly said net income for the fiscal first quarter ended July 31 was $40.8 million, or 71 cents per share, compared with $28.7 million, or 50 cents per share, a year earlier.
Excluding restructuring costs of 1 cent a share, it earned 72 cents a share, beating analysts' average expectation of 67 cents a share, according to Reuters Estimates.
Quarterly sales rose 7 percent to $561.5 million. The Eagle Family Foods business was responsible for half of the total increase in sales, Smucker said, also citing its Jif, Crisco, Pillsbury and Uncrustables brands for adding to sales growth.
Gross margins were higher in the quarter, helped by the divestment of its low-margin Canadian operations, the company said.
Smucker said its peanut butter sales were still strong, following a recall of ConAgra's Peter Pan peanut butter last February.
RISING COSTS Orrville, Ohio-based Smucker said it had faced significantly higher commodity costs -- particularly for milk, soybean oil, wheat and peanuts -- in the first quarter.
As a result, the company, which had already raised milk prices in July, said it would look into raising them even more across several products.
I would suspect that all the general managers (across all product categories) will be looking at pricing, Chief Financial Officer Mark Belgya said in a conference call.
Company officials also said that they hoped price increases
-- which would depend on individual commodities -- will not be -- which would depend on individual commodities -- will not be significant.
The company also said it expects raw material costs to keep rising in the foreseeable future.
Smucker shares were up 46 cents at $56.06 on the New York Stock Exchange.