J.M. Smucker Co. managed to make the recent ups and downs in ingredient costs work in its third quarter, partly by making price increases for coffee stick.
Food makers across the board have been struggling to balance their prices with recent run-ups in their costs for milk, sugar, wheat, corn and other key ingredients.
Companies want to charge more to make up the difference, but are hesitant to raise them too far too fast and scare cost-conscious shoppers away.
Smucker has raised prices on products such as coffee without losing customers. But it has also cut prices on peanut butter and other items
The company, based in Orville, Ohio, reported third-quarter earnings Thursday that beat analyst expectations and raised the low end of its full-year earnings guidance. Shares jumped in trading.
The maker of Jif peanut butter, Folgers coffee and other foods reported net income of $132 million, or $1.11 per share, for the period that ended Jan. 31. That's down from $135.5 million, or $1.14 per share, a year earlier.
Taking out restructuring charges and other special items, the company earned $1.27 per share. Analysts expected $1.26, according to FactSet.
Revenue rose 9 percent to $1.31 billion, beating the $1.26 billion analysts expected.
Smucker said higher prices contributed about 4 percent to its revenue. The company has raised its coffee prices several times as costs for beans, fuel and other items rose.
It said earlier this month it would raise prices for some coffee products, which include Folgers and Dunkin' Donuts brands, by an additional 10 percent. However, it has lowered prices on Crisco oils and it cut peanut butter prices by 5 percent earlier this year as peanut costs dipped.
The company said higher raw material costs for coffee beans, milk, sugar and soybean oil more than offset lower peanut costs.
Smucker also sold more of its products overall, in some categories the first jump in several quarters.
The company said it sold more Jif peanut butter, Hungry Jack pancake mixes and syrup and the company's namesake fruit spreads.
Company leaders say the top pressures remain: volatile ingredient prices and shoppers looking for value.
Smucker said it would take a "balanced" approach to pricing but said that given the uncertainty of commodity prices, it may need more price increases. However, it remained certain that would maintain profitability because of cost reductions, efficiency improvements and sales volume growth.
Smucker now expects its fiscal 2011 adjusted earnings between $4.60 and $4.65 per share. Its prior outlook called for earnings between $4.55 and $4.65 per share. The company anticipates full-year revenue will climb 4 percent.
Analysts predict 2011 net income of $4.66 on revenue of $4.72 billion.
Shares rose $1.75, nearly 3 percent, to $65.70 in midday trading.
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