J M Smucker Co (NYSE:SJM) expects a sales decline of 0.5% for FY 22

J M Smucker Co (NYSE:SJM) stock fell 1.07% (As on Nov 24, 11:23:57 AM UTC-4, Source: Google Finance) after the company raised its outlook for fiscal 2022 despite increasing cost inflation and continued supply chain disruption after the fiscal second quarter topped Wall Street expectations, reflecting the sale of Crisco and Natural Balance. Cash provided by operating activities was $165.1 million, compared to $378.7 million in the prior year, primarily reflecting an increase in working capital requirements, as compared to the prior year, mostly due to the timing of payments for accounts payable and accrued liabilities, and a decrease in net income adjusted for noncash items. Free cash flow was $105.9 million, compared to $326.3 million in the prior year, reflecting the decrease in cash provided by operating activities and a $6.8 million increase in capital expenditures. Net debt proceeds in the quarter totaled $1.4 million.

SJM in the second quarter of FY 22 has reported the adjusted earnings per share of $2.43, beating the analysts’ estimates for the adjusted earnings per share of $2.05. The company had reported the adjusted revenue growth of 1 percent to $2.05 billion in the second quarter of FY 22, beating the analysts’ estimates for revenue of $1.96 billion. Excluding noncomparable net sales in the prior year of $135.7 million for the divested Crisco® and Natural Balance® businesses, as well as $5.6 million of favorable foreign currency exchange, net sales increased $146.1 million, or 8 percent. The increase in comparable net sales was due to favorable volume/mix and higher net price realization for each of the Company’s U.S. Retail segments and for International and Away From Home. Gross profit decreased $106.7 million, or 13 percent, reflecting higher costs, primarily driven by increased commodity, manufacturing, transportation, and packaging costs, and the noncomparable impact of the Crisco® and Natural Balance® divestitures, partially offset by increased pricing and favorable volume/mix.

Moreover, US retail pet foods segment fell 1% to $701.6 million, US retail coffee rose 8% to $645.1 million, US retail consumer foods slid 8% to $441.2 million, and international and away from home segment grew 4% to $262.1 million.

The food and beverage maker expects a sales decline of 0.5% to growth of 0.5% for fiscal 2022, versus the prior estimate of a 1.5% to 2.5% decline. The company also expects adjusted earnings of $8.35 to $8.75 per share, compared with the prior outlook of $8.25 to $8.65 a share. Analysts polled by Capital IQ are expecting sales of $7.9 billion and adjusted EPS of $8.44.

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