J.M. Smucker Co. reported its 2022 fiscal first quarter results on Aug. 26 for the three months ended July 31, showing a notable decline in year-over-year sales and a major decline in net profit.
Orville, OH-based Smucker reported Q1 sales of $1.86 billion, down 5.8 percent year-over-year, while organic sales improved approximately 1 percent. Meanwhile, the company's Q1 operating profit of $259 million sunk 28 percent and its net profit of $154 million plunged 30 percent.
"Our industry continues to navigate a period of significant supply chain volatility, disruption, and cost inflation. In the near term, we expect to experience higher raw material and logistics cost increases," president and CEO Mark Smucker said in the company's earnings release. "However, we are optimistic in managing these challenges and remain confident in the momentum of our business, the talent and commitment of our people, and our strengthened financial position to deliver balanced top- and bottom-line growth and long-term shareholder value."
Much of the 6 percent overall sales decline was due to a noncomparable sales sum of $135.5 million from Smucker's divested Crisco (December 2020) and Natural Balance (January 2021) businesses. Smucker said the organic increase was primarily due to favorable folume/mix for its Away From Home operating segment and U.S. Retail Pet Foods segment, partially offset by reduced volume/mix for its International operating segment and U.S. Retail Coffee segment.
By business segment in Q1:
- U.S. Retail Pet Foods sales of $648 million were down approximately 6 percent year-over-year, with profit of $80 million down 36 percent on margin of 12.3 percent (-580bps)
- U.S. Retail Coffee sales of $543 million were down approximately 5 percent, with profit of $151 million down 17 percent on margin of 27.9 percent (-410 bps)
- U.S. Retail Consumer Foods sales of $436 million were down approximately 11 percent, with profit of $119 million down 10 percent on margin of 27.2 percent (+30 bps)
- International and Away From Home sales of $231 million were up approximately 6 percent, with profit of $33 million up 6 percent on margin of 14.2 percent (+10 bps)
"Net price realization was a slight benefit, primarily reflecting higher net pricing in the U.S. Retail Consumer Foods segment, mostly offset by lower net pricing in the U.S. Retail Coffee segment," the company noted.
Smucker revised its previously-provided full-year sales outlook. The company now expects 2022 fiscal sales to decrease 1.5 to 2.5 percent compared to 2021, up from a 2 to 3 percent decline forecast in its Q4 2021 report. The current forecast incorporates an impact of $335.6 million related to the divested Crisco and Natural Balance businesses. On a comparable basis, organic sales are expected to increase apporixmately 2.5 percent at the mid-point of Smucker's fiscal 2022. That organic gain reflects an expected 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 organic guidance also reflects incremental net pricing actions in response to higher costs versus previous expectations, offset by reduced volume/mix, inclusive of anticipated price elasticity and supply disruption for internationally sourced pet food products.