JM Smucker stock tanks on Q4 earnings, sales miss

Shares of food and beverages company JM Smucker (SJM) dropped sharply Thursday after its fourth-quarter results missed Wall Street estimates. While earnings registered a year-over-year increase, sales remained flat.

Adjusted earnings advanced to $1.93 per share from $1.80 per share in the fourth quarter of 2017, but missed estimates. Reported earnings were $185.9 million or $1.64 per share, up 71% compared to last year.

Fourth-quarter sales remained broadly unchanged at $1.78 billion and the top-line was below analysts’ expectations. While the sales performance was negatively impacted by lower volume/mix, benefits from favorable pricing were offset by softness in the coffee segment. Sales of the other main divisions – consumer goods and pet foods – were almost in line with the year-ago period.

“While fourth quarter adjusted earnings per share was below our projections due to industry-wide headwinds and certain discrete items, the actions we are taking to align our portfolio for growth set up our business to win. We acquired Ainsworth, thereby strengthening our pet food portfolio with the addition of the high-growth, on-trend Rachael Ray Nutrish premium pet food brand,” said CEO Mark Smucker.

Sales remained broadly unchanged and the top-line was negatively impacted by lower volume/mix

During the quarter, JM Smucker expanded its pet food portfolio by acquiring Ainsworth Pet Nutrition. The company is planning to sell its baking business in the US as part of the efforts to focus more on coffee, snacking and pet foods.

For fiscal 2019, the company expects to record sales of $8.3 billion, which represents a 13% year-on-year increase aided mainly by the acquisition of Ainsworth. Full-year earnings are estimated to be in the range of $8.40 per share to $8.65 per share. The results are expected to benefit from the ongoing cost-reduction initiatives.

Shares of JM Smucker plunged nearly 9% in the pre-market trading Thursday, following the earnings announcement.

Among rivals, Kraft Heinz Company (KHC) reported better-than-expected earnings for its most recent quarter. However, sales dropped modestly and missed estimates due to softer demand.