JM Smucker raised its annual profit forecast after higher product prices, especially for coffee, helped the Uncrustables sandwich maker beat market estimates for quarterly earnings.
Like other packaged food companies, JM Smucker has been raising prices to combat growing costs of raw materials such as coffee.
That boosted the company's third-quarter gross margin to 40.2% from 36.9% last year.
It now expects annual adjusted earnings per share in the range of $9.85 to $10.15, compared with the prior forecast of $9.70 to $10.10.
The company's net sales in the domestic retail coffee segment - its biggest revenue generator - rose 2% in the quarter, compared with a 1% decline last year. The increase was primarily driven by higher prices for its Folgers and Café Bustelo coffee brands.
Quarterly Highlights
Smucker reported quarterly adjusted profit of $2.61 per share for the three months ended 31 January, above estimates of $2.37, according to data compiled by LSEG.
However, certain supply chain disruptions pulled down net sales by 2% to $2.19 billion (€2.10 billion), below expectations of $2.23 billion (€2.14 billion).
JM Smucker also lowered its annual net sales forecast. It now expects an increase of 7.25%, compared with a rise of 7.50% to 8.50% expected earlier.
The company said the forecast reflects a loss of about $100 million in contract manufacturing sales related to its divested pet food brands, compared with the prior year.
Mark Smucker, chair of the board, president and chief executive officer, stated, "Our third quarter performance reflects the continued execution of our strategy and ability to deliver positive results in a dynamic operating and consumer environment.
"Our strategy and the prioritization of our key growth platforms has enabled us to deliver a strong fiscal year to date, and we are well-positioned to deliver both top- and bottom-line growth, while increasing shareholder value over time."
News by Reuters, additional reporting by ESM.
