* Q4 adj EPS $1.10 vs est $0.99
* Indicates it will cut prices as volume takes hit
* Sees FY13 EPS $5.00-$5.10 vs est $5.23
* Shares flat in morning trade
By Mihir Dalal
June 7 Price cuts may hurt J.M. Smucker Co's
earnings this year, but the company hopes to win back
customers who ditched its brands such as Folgers coffee and Jif
peanut butter for cheaper alternatives.
Smucker, which reported higher-than-expected quarterly
results on Thursday, has been trying to strike a balance between
passing on record high costs of raw materials to shoppers and
keeping its market share -- with limited success so far.
Prices for Folgers remain much higher than last year,
despite the company cutting prices twice since last August,
including a 7 percent reduction last month. Other brands like
Jif and Crisco oils are also pricier.
After higher prices led to a 7 percent decline in overall
volumes for the quarter ended April 30, the company indicated it
was ready to make its brands more affordable.
"While higher food prices continue to pose a challenge to
consumers, we believe that softening commodity costs should
provide some relief to improve volume," operations chief Vince
Byrd said in a statement.
Costs of coffee, a key raw material for Smucker, have
declined after rallying to 34-year highs in 2011 because of
tight supplies of washed arabica beans and speculative buying.
The company forecast mixed results for the year ending April
2013. It projected earnings below expectations, while its sales
outlook was comfortably above.
Smucker's fourth-quarter earnings rose to $104.1 million, or
93 cents per share, from $94.9 million, or 82 cents per share,
Excluding items, it earned $1.10 per share, trumping
analysts' estimates of 99 cents per share, according to Thomson
Sales rose 14 percent to $1.35 billion.
Along with higher prices, the company's acquisitions of
espresso coffee company Rowland Coffee Roasters Inc and Sara Lee
Corp's North American food service coffee business
helped drive higher sales.
Smucker's shares were flat at $76.07 on Thursday morning on
the New York Stock Exchange.