By Matt Andrejczak
SAN FRANCISCO (Dow Jones) - Del Monte Foods Co. shares surged
14% Wednesday on a stronger forecast for its fruits and pet foods,
while J.M. Smucker Co. shares slipped 6% after the jam maker cut
its outlook due to slower peanut butter sales.
Del Monte, which is running a new advertising campaign
spotlighting its fruit as well as raising prices, said fiscal 2009
sales will grow 9% to 11% over 2008. It is the second time in three
months Del Monte (DLM) has lifted its sales outlook.
The fruit seller pegged earnings from continuing operations
between 64 and 68 cents a share, up from its prior target of 58
cents to 62 cents.
Smucker, maker of Jif peanut butter and Hungry Jack Pancake mix,
cut its fiscal 2009 profit forecast to $3.15 to $3.30 a share,
excluding charges. Its prior target had been $3.45 to $3.50 a
share. Smucker said the nationwide peanut butter recall is cutting
into its sales and profit.
None of the Smucker's peanut butter products were purchased or
made by Peanut Corp. of America, the now bankrupt manufacturer
blamed for the salmonella-related outbreak.
In midday trading, Del Monte shares rose to $7.44. Smucker
shares fell to $38.78.
For the quarter ended Jan. 25, Del Monte reported fiscal third
quarter net income of $60.5 million, or 30 cents a share, up from
net income of $53.5 million, or 26 cents a share. Analysts polled
by FactSet Research had expected the food maker to earn 23 cents a
share.
Sales rose 8.4% to $942.3 million.
Del Monte boosted prices for its fruits, vegetables, and pet
foods to shore up its profit margin. For the quarter ended Jan. 25,
sales of fruits, vegetables and broths rose 3.4%. Pet food sales
rose 15% on new Meow Mix items and Kibbles 'n Bits dry pet food
products.
Smucker reported fiscal third quarter net income of $77.9
million, or 68 cents a share, up from $42.4 million, or 75 cents a
share, in the year-earlier quarter. Sales rose 78% to $1.2 billion
for the three months ended Jan. 31.
The jump in profit and sales was largely aided by its purchase
of Folgers Coffee from Procter & Gamble Co. last November. The
addition of Folgers helped Smucker boost its gross profit margin
and cash flow from operations. Gross margin rose to 33.9% from
29.4% a year ago.
Smucker (SJM) also sells Millstone and Dunkin Donuts coffee to
retailers.
Like Del Monte and other food makers, Smucker raised prices for
its jams, cooking mixes and oils during the recent quarter to
offset commodity costs.