SJM JM Smucker Company

J.M. Smucker Co. on Tuesday sharply raised its earnings guidance for the year as its profit jumped 15% in the latest quarter, handily beating Wall Street expectations on continued momentum in its coffee business.

The company, which produces Folgers coffee and Pillsbury baking mixes in addition to its namesake jellies, jams and peanut butter, now expects adjusted earnings of $5.84 to $5.94 a share in 2016, compared with previous guidance for $5.70 to $5.80 a share. However, Smucker lowered its revenue forecast to $7.8 billion from $7.9 billion.

Chief Executive Richard Smucker pointed to strength in the coffee business, specifically the launch of "on-trend products" such as Dunkin' Donuts K-Cup pods and lower pricing on Folgers roast and ground offerings. He also highlighted expanded distribution for its Natural Balance brand into the largest pet specialty retailer.

For the quarter ended Jan. 31, profit grew 15% to $185.3 million from $160.9 million a year earlier. Per-share earnings were $1.55, compared with $1.58 a year ago, when the company had fewer shares outstanding.

Per-share adjusted earnings rose to $1.76 from $1.54.

Total sales grew 37% to $1.97 billion. Sales were lifted by the recent acquisition of Big Heart Pet Brands, which makes Milk-Bone dog treats and Meow Mix cat food. The business contributed $580.3 million to sales in the quarter. The company said excluding Big Heart, the impact from foreign currency exchange, and the impact of the U.S. canned milk divestiture, net sales declined $17.9 million, or 1%.

Analysts polled by Thomson Reuters were looking for earnings of $1.64 a share on revenue of $2.05 billion.

The company's U.S. retail coffee sales grew 1% in the quarter to $575.5 million, driven by the U.S. retail launch of its Dunkin' Donuts K-Cup pods and Folgers mainstream roast and ground offerings, partially offset by Folgers K-Cup pods. The favorable volume and mix was mostly offset by lower pricing on Folgers mainstream roast and ground offerings.

Like other big food companies, Smucker has seen heated competition from smaller companies positioning their products as fresher and more natural, as Americans shy away from traditional processed-and-packaged foods.

In its consumer foods segment, which includes Smucker's namesake fruit spreads, its Pillsbury products, and Crisco oil, sales were down 5% to $569.8 million, weighed down by lower prices for its Jif brand peanut butter. The divestiture of its U.S. canned milk brands also dented sales by $9.4 million.

Gross margin expanded to 38.7% from 36.3% a year earlier.

Shares of the company, which have risen 3.5% over the past three months, were inactive premarket.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

February 23, 2016 09:35 ET (14:35 GMT)

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