Smucker to take a big hit from Jif recall

A recall for a number of peanut butters sold in Canada and the U.S. put a damper on otherwise positive Q4 results.
Jif-peanut-butter

Smucker is reporting a Q4 revenue and net income beat, but is warning of a big hit thanks to the recall of some Jif peanut butter products due to salmonella concerns.

In May of this year, the CPG said it was recalling nearly 50 types of Jif peanut butter products sold in the U.S. after a Food and Drug Administration investigation and the hospitalization of two people and an outbreak across 12 states. The company also issued a voluntary recall for a number of peanut butter products sold in Canada, including creamy, light and crunchy peanut butter products.

Smucker is warning of a $125 million hit in the full year.

This put a damper on otherwise positive Q4 revenue, hitting $2.03 billion in the three months ended in April, topping analyst forecasts of $1.98 billion. The company says it’s also being dogged by inflation and supply chain issues, common to the CPG space as of late.

Mark Smucker, president and CEO, says the company has to manage costs and will continue to be very prudent and judicious about price increases. However, he says, it has to protect its dollar profit and keep shareholder interests at heart.

Inflation has been “significant” but a majority of cost increases have been priced in, Smucker says.

“We have seen competitors across our categories take price, and in many cases we have led those price increases, in other cases we have followed,” Smucker says, adding that it is keeping a close watch on retail customers and competitors.

For its coffee business, led by the recently-refreshed Folgers, Smucker is anticipating top line growth driven by pricing and that margins will improve as it moves through fiscal year. With its pet portfolio, Smucker says pricing actions are covering material cost inflation.

Smucker says its Rachael Ray Nutrish pet brand had a good quarter, up 14%. Some of the CPG’s actions are to help stabilize the brand, he says. Areas of focus are supporting faster growing categories like wet dog food and dog snacks. It’s also kicking in new advertising in back half of the year, the company says.

Demand for its frozen handheld business, Uncrustables, continues to exceed supply, he says. And the company reports that it made one billion sandwiches in the fiscal year, despite labour and supply constraints, which have since resolved. The Uncrustables brand is “super healthy” and will continue to grow and Smucker maintains it will become a billion dollar brand.

Smucker says it is confident in its portfolio, 86% of which grew or maintained share, which “doesn’t just happen.” It’s a combo of investment in business, execution by employees and execution of strategy.

Its success, the company says, is by being in resilient categories, and the CPG says it is focused on value propositions and playing in multiple segments, well-positioned in this environment.

The company is still interested in acquisitions, an important part of its strategy, and wants to be prudent about dollars invested.

 

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