J.M. Smucker (SJM) 1Q17 Earnings Call Notes

posted in: Earnings Call, Notes | 0

SJM expects top line weakness to be short-term and has not changed long-term guidance

“In closing, we anticipate the challenges to revenue growth in certain categories will persist in the near-term, as reflected in our revived sales guidance. However, our long-term expectations remain intact. As Mark indicated, we’re executing on plans and initiatives to improve top line trends, while investing in our capabilities to enhance future growth. At the same time, we’re pleased with the earnings and cash flow performance of the company.” Mark Belgya – Vice Chair and Chief Financial Officer


Pricing may be an option should coffee bean price rise

“So if we had to look at pricing changes, if that happened it would be much later in the year… And given the fact that we’ve gone down twice over the last 12 months, I think, we’ve got room if we had to absorb some of that even if we had to do pricing” Steven Oakland – Vice Chair and President, U.S. Food and Beverage


Weakness in pet food segment causes SJM to focus on stabilizing the segment before focusing on growth again

“I just think it’s just going to take us a little longer to stabilize the business. We – it’s just – I think just a little more time to get that stabilization. And once we stabilize the business then we can get it growing again. I just think our performance the first quarter was not what we expected. And based on a combination of both Kibbles and Meow Mix and the softness in the first quarter is what really drove us to be more conservative on the back-half of the year.” Barry Dunaway – President, Pet Food and Pet Snacks


In anticipation of very favorable commodity tailwinds in the pet food segment, SJM is keeping an eye on competitor prices

“As far as pricing begins, we have to front and center competitive with our – the other two primary competitors that we compete with. So as a third player in that category we’ll continue just to be competitive with the other two primary competitors. So that will be our focus. We’ll manage our commodities in our Pet business just like we do in our other businesses, and that will be part of our pricing strategy.”  Mark Smucker – President and Chief Executive Officer


Despite a possible premiumization trend in pet foods, SJM intends to stay in all categories because it sees the broader segment as a long-term opportunity

“Our snack brands cut across all the segments as well and our great brands… We think for long-term, it’s definitely the right business for us to be in. So we’re going to leverage the scale and capabilities of broader $8 billion company that continue to grow the pet business.” Barry Dunaway – President, Pet Food and Pet Snacks