Company CEO Mark Smucker said prices have been in place for 12 months for at least 30 years. "It's the status quo," he said during teleconference to discuss quarterly results. According to him, a recent rise in prices is due to traders' hedging of traded positions and does not reflect a change in the fundamentals of supply and demand.
Currently, Arabica coffee is trading at 102.05 cents per pound on the New York Stock Exchange (ICE Futures US), up from a low of just under 90 cents in early May. The price, however, is still historically low.
JM Smucker CEO also cited competition in the pet food market. In this segment, the company recorded sales of US $ 721 million in the fiscal fourth quarter. The performance was below analysts' estimates of $ 761 million by FactSet. "Clearly, there is competition," he said.
Last year, JM Smucker invested heavily in the segment by buying pet food manufacturer Rachael Ray's Nutrish. Other large packaged food companies are also investing in this market. General Mills, for example, acquired the Blue Buffalo breeder last year and has been expanding the distribution of the product to Walmart.
In the fourth fiscal quarter, JM Smucker made net income of $ 71.5 million, or $ 0.63 per share. The result is 61.5% lower than in the same period of last year. Adjusted earnings were $ 2.08 per share. The company's net sales totaled US $ 1.9 billion in the quarter, which represents an increase of 6.7% in the annual comparison. Analysts had expected adjusted profit of $ 1.95 and revenue of $ 1.93 billion. Source: Dow Jones Newswires.
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