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J.M. Smucker reports second quarter profit above expectations, but coffee sales are 3% down to $685.7 million

The company's quarterly gross profit margin rose to 37.4% from 31.8% a year ago. On an adjusted basis, the company posted a profit of $2.59 per share in the quarter ended Oct. 31, an increase of 8% topping analysts’ estimates of $2.47 per share

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MILAN – On Tuesday, The J.M. Smucker Co. – the parent company of Folgers, Café Bustelo, and the licensee of the Dunkin’ brand for packaged coffee products sold in retail channels – reported 2Q results that exceeded expectations, aided by a rise in product pricing and a reduction in input costs.

However, net sales in U.S. Retail Coffee were 3% down, due to a lower net price realization.

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The company’s quarterly gross profit margin rose to 37.4% from 31.8% a year ago. On an adjusted basis, the company posted a profit of $2.59 per share in the quarter ended Oct. 31, an increase of 8% topping analysts’ estimates of $2.47 per share.

Net sales decreased $266.5 million, or 12 percent. Net sales excluding the divestiture and foreign currency exchange increased 7 percent.

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Net income per diluted share was $1.90. Adjusted earnings per share was $2.59, an increase of 8 percent.

Cash provided by operations was $176.9 million compared to $205.0 million in the prior year. Free cash flow was $28.2 million, compared to $102.9 million in the prior year.

The company slashed its full-year financial guidance, citing the impact of its $5.6 billion acquisition of Twinkies-maker Hostess Brands, although the food packaging giant still posted better-than-anticipated second-quarter income.

The J.M. Smucker Co.: U.S. Retail Coffee

Net sales decreased $24.1 million, or 3 percent, to $685.7 million. Net price realization reduced net sales by 4 percentage points, primarily driven by list price decreases, partially offset by reduced trade spend.

Volume/mix was neutral in the quarter, as increases for the Café Bustelo and Dunkin’ brands were mostly offset by the Folgers brand.

Segment profit decreased $16.7 million, to $171 million, primarily reflecting the $39.1 million unfavorable impact related to the termination of a supplier agreement.

Excluding this item, segment profit increased, primarily driven by a favorable net impact of decreased commodity costs and lower net price realization.

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