J. M. Smucker Earnings Cheat Sheet: Margins Shrink as Costs Rise, Profit Falls

Rising costs did not help S&P 500 (NYSE:SPY) component J. M. Smucker Company (NYSE:SJM) in the fourth quarter as profit dropped from a year earlier. The J. M. Smucker Company manufactures and markets branded food products on a worldwide basis.

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J. M. Smucker Company Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for J. M. Smucker Company fell to $94.9 million (82 cents/share) vs. $120.6 million ($1.01/share) a year earlier. A decline of 21.3% from the year earlier quarter.

Revenue: Rose 11% to $1.19 billion YoY.

Actual vs. Wall St. Expectations: SJM reported adjusted net income of of $1/share. By that measure, the company beat the mean estimate of 99 cents/share. Estimates ranged from 96 cents per share to $1.02 per share.

Quoting Management: “Our long-term focus and strategy of owning and marketing leading brands have allowed us to deliver another year of strong sales and earnings,” commented Tim Smucker, Chairman of the Board and Co-Chief Executive Officer.  “We are gratified to have achieved these results in a challenging operating environment.  Our ongoing success provides opportunities to return value to our shareholders.  During the year, we repurchased over four percent of our outstanding common shares and increased the dividends paid by 17 percent.  Total shareholder return for 2011 exceeded 25 percent reflecting the impact of these actions.”

Key Stats:

Gross margin shrunk 4.8 percentage points to 35.5%. The contraction appeared to be driven by rising costs as the figure rose 19.9% from the year earlier quarter while revenue rose 11%.

The company has now seen net income fall in each of the last two quarters. In the third quarter, net income fell 2.6% from the year earlier quarter.

The company’s revenue has now risen for two straight quarters. In third quarter, revenue increased 8.8% to $1.31 billion from the year earlier quarter.

Competitors to Watch: TreeHouse Foods Inc. (NYSE:THS), Ralcorp Holdings, Inc. (NYSE:RAH), The Hain Celestial Group, Inc. (NASDAQ:HAIN), General Mills, Inc. (NYSE:GIS), ConAgra Foods, Inc. (NYSE:CAG), B&G Foods, Inc. (NYSE:BGS), Kellogg (NYSE:K), Kraft Foods (NYSE:KFT), Farmer Brothers Co. (NASDAQ:FARM), Lancaster Colony Corp. (NASDAQ:LANC), Starbucks (NASDAQ:SBUX), Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), Campbell Soup (NYSE:CPB) and H.J. Heinz Company (NYSE:HNZ).

Stock Performance: Shares of SJM are up almost 1% to $76.99 per share.

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(Sources: YahooFinance, Xignite Financials)