Pet food acquisition gives Smucker’s amazing third-quarter results

Pet food acquisition gives Smucker’s amazing third-quarter results

The J.M. Smucker Co.’s acquisition of Ainsworth Pet Nutrition L.L.C. in April 2018 paid dividends for the company’s U.S. Retail Pet Food business unit during the third quarter of fiscal 2019, ended Jan. 31.

The performance of Smucker’s other three business units, U.S. Retail Coffee, U.S. Retail Consumer Foods, and International and Away From Home, saw sales and segment profits that were either flat or down during the quarter.

The company earned $121.4 million, equal to $1.07 per share on the common stock, during the quarter. A year prior, Smucker earned $831.3 million, equal to $7.32 per share. The significant difference in quarterly earnings was partially due to tax legislation passed at the end of 2017.

Sales during the third quarter ticked up 6% to $2,012 million. Excluding the Ainsworth acquisition and divestment of the company’s baking business, net sales increased 1% compared with the same period of the previous year.

In U.S. Retail Coffee, sales were $561.6 million, up 2%, and operating profit totaled $183.7 million, up 1%. The company called out the performance of its Dunkin’ Donuts and 1850 brands as positive contributors during the quarter. The brands’ performance was partially offset by lower net price realization due to increased trade spend.

U.S. Retail Consumer Foods segment results were affected by the divestment of Smucker’s baking business. Sales of $422.7 million were down 17% compared to the same period of the previous year. Segment profit fell 21% to $95.9 million. Excluding the impact of the baking business divestment, sales for the business unit rose 4% during the quarter. Brands that performed well during the quarter included Uncrustables and Jif.

International and Away From Home sales fell 6% during the quarter to $268.6 million and segment profit fell 2% to $52.5 million. Volume/mix issues, unfavorable foreign currency exchange and lower net price realization all contributed to the business unit’s weak performance.

In Pet Food, the company’s largest business unit, sales rose 35% to $759 million and segment profit rose to $147.9 million, a 26% increase. The sales growth of $198 million is attributable to the Ainsworth acquisition. Excluding the acquisition, segment sales fell $1.2 million due to an impairment charge related to the exiting of certain private label businesses and discontinuation of certain wet dog food products.