SJM - J.M. Smucker rides higher pricing to earnings beat raised guidance

J.M. Smucker ( NYSE: SJM ) reports sales rose 0.5% in FQ1 to $1.87B for a period that included a 9 percentage point unfavorable impact related to the Jif peanut butter product recall. Comparable sales were up 4% during the quarter.

The increase in comparable sales was primarily driven by a 14 percentage point increase from net price realization, primarily reflecting list price increases for the U.S. Retail Coffee, U.S. Retail Pet Foods, and International and Away from Home businesses, partially offset by the unfavorable impact of customer returns and fees related to the Jif peanut butter product recall.

Adjusted operating income fell 17% to $270M, reflecting a decrease in gross profit and a $19.8M increase in selling, distribution, and administrative expenses, partially offset by an anticipated insurance recovery related to the Jif peanut butter product recall.

Looking ahead, J.M. Smucker ( SJM ) sees FY23 revenue growth of +4% to +5% to a range of $8.32B to $8.40B vs. $8.29B consensus and expects FY23 EPS of $8.20 to $8.60 vs. a prior view for $7.85 to $8.25 and $8.04 consensus. The increased EPS range reflects the benefits of higher net pricing actions and shares repurchased in the prior fiscal year being more than offset by cost inflation, the anticipated volume/mix impact of price elasticity of demand, the unfavorable impact of the Jif peanut butter product recall, and increased SD&A expenses. Free cash flow of $550M is anticipated for the full year vs. $500M prior view.

Shares of SJM rose 1.81% premarket to $140.25 following the FQ1 profit beat.

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