The J. M. Smucker Company (SJM – Free Report) reported third-quarter fiscal 2018 results, wherein the company crushed its three-quarter long trend of posting year-over-year decline in earnings. In fact, both the top and bottom line improved year over year and surpassed the Zacks Consensus Estimate. Moreover, benefits from tax reforms encouraged management to raise its earnings outlook for fiscal 2018.  

Quarter in Details

Adjusted earnings of $2.50 per share surged 25% year over year and surpassed the Zacks Consensus Estimate of $2.16. Notably, earnings included a nearly 35 cents benefit from tax reforms.

J.M. Smucker Company (The) Price, Consensus and EPS Surprise

J.M. Smucker Company (The) Price, Consensus and EPS Surprise | J.M. Smucker Company (The) Quote

Net sales in the quarter inched up 1% year over year to $1,903.3 million and also beat the consensus estimate of $1,888 million. Sales were fueled by growth across most core brands and categories. Further, favorable volume/mix (mainly in pet food and coffee segments) aided sales growth. However, this was somewhat negated by lower pricing at pet foods. Net sales received benefits of $5.8 million owing to favorable currency exchange.

Adjusted gross profit climbed 1% to $731.5 million, whereas adjusted gross margin contracted 10 basis points to 38.4%. Adjusted operating income for the quarter increased 4.4% to $399.8 million, though the adjusted operating margin contracted 40 basis points to 21%.

Segment Performance

U.S.Retail Coffee Market: The company’s largest segment, U.S. Retail Coffee Market, reported 2% growth in sales to $550.5 million. This was backed by favorable volume/mix, primarily attributable to Dunkin’ Donuts K-Cup pods and the Cafe Bustelo brand. This was somewhat countered by lower net price realization at the Folgers brand.

Segment profit jumped 6% to $182.1 million, due to improved volume/mix and lower input costs, somewhat negated by escalated marketing costs.  

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