On Thursday, the maker of Folgers coffee, J.M. Smucker Co has posted a quarterly profit that was better than had been expected. The company’s results were helped by its cost cutting program and said it was slashing another $100 million more from its annual costs.
Smucker had to resort to huge costs cuts amidst the continual slowdown in demand for its different coffee products and much stiffer competition in its business dedicated to pet foods.
Sales in the Smucker coffee business dropped for the fourth consecutive quarter during the most recent quarter which ended on April 30.
Sales were hurt due to weak demand for its Folgers brand, while a dip in sales of its different brands of cat food such as Meow Mix and 9Lives pulled down total sales of pet foods by over 5% during the three-month period.
However, selling, distribution and its administrative expenses were down more than 5% ending the quarter at $334.3 million for the three months, helped through the implementation of the restructuring program that last year the company announced, which includes reductions in jobs and the shuttering of different facilities.
Smucker said it was now expecting to have annual cuts in costs of more than $450 million with the next three fiscal years.
The net income for the company fell during the quarter to just over $110.4 million equal to 96 cents a share for the fiscal fourth quarter ending April 30. That is compared to net income of $191 million equal to $1.62 per share for the same period one year earlier.
The coffee maker posted an impairment charge of more than $57.5 million as well as a derivative loss of $21.5 million during its fiscal fourth quarter.
Excluding certain items, the company had earnings per share of $1.80 that beat the average estimates of analysts that was set at $1.72 a share.
Net sales at Smucker were down by 1.3% ending the three month period at $1.78 billion which marked the fourth consecutive quarter in which the company suffered a decline, but did just beat estimates of analysts for $1.77 billion.
More and more competition has made it more difficult for Smucker in its consumer products such as coffee and its namesake jams as the competition has taken a share of the market and forced it to adjust its prices that in turn hurt margins.
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