ORVILLE, Ohio (AP) — J.M. Smucker Co. said Thursday its fiscal second-quarter net income fell 15 percent as the food maker's ingredient costs increased.
The maker of Folger's coffee, Jif peanut butter and its namesake spreads, like most of its food maker peers, has raised prices to offset soaring costs for ingredients. But companies face a tricky balance between covering costs and not alienating consumers with higher prices. Smucker's total volume fell 1 percent during the quarter.
Meanwhile, the company's cost for goods such as oil, flour, milk and peanuts rose 30 percent.
"We are effectively managing this period of significant cost inflation," said CEO Richard Smucker in a statement. Raising prices on products helped the company grow revenue 18 percent.
Orville, Ohio-based J.M. Smucker earned $127.2 million, or $1.12 per share, from August through October. That compares with $149.7 million, or $1.25 per share, in the same quarter last year.
Excluding one-time items, net income totaled $1.29 per share. That fell short of analyst expectations of $1.39 per share, according to FactSet.
Revenue rose to $1.51 billion from $1.28 billion last year. Analysts expected $1.5 billion.
Shoppers bought more items such as Pillsbury baking mixes and Jif peanut butter, but sales of non-branded drinks, Crisco oils, Folgers coffee and Pillsbury flour fell.
Ingredient costs, particularly for green coffee and peanuts, are expected to remain high for the rest of the year, and the company plans further price increases through April, the end of its fiscal year
Coffee has been an increasing focus for J.M. Smucker. It announced in October that it was buying a chunk of Sara Lee Corp.'s North American coffee and tea foodservice operations for $350 million. The two companies also announced plans at the time for a long-term partnership to work on a new liquid coffee drink.
On Thursday, J.M. Smucker also lowered its full year guidance due to costs related to issuing $750 million in long-term debt in October.
It now expects earnings, excluding restructuring, merger and integration costs and other one-time items, to be $4.90 to $5, from a prior range of $5 to $5.15 per share. Analysts expect net income of $5.11 per share.
The news came as J.M. Smucker said it is recalling some 16-ounce jars of its Smucker's Natural Peanut Butter Chunky sold in several states because of possible salmonella contamination.