<<~~~~ J.M. Smucker's coffee sales rise on higher realized prices, K-Cup sales
REUTERS 1:20 PM ET 08/27/15
Symbol Last Price Change
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QUOTES AS OF 10:47:09 AM ET 08/28/2015
* US coffee sales up for first time in 11 qtrs
* Dunkin' Donuts K-Cup pods largely drove sales
* Folgers, Dunkin' Donuts coffee prices cut 6 pct
* Q1 profit, revenue beat estimates
* Shares rise 7.4 percent
Aug 27 (Reuters) - Sales at J.M. Smucker Co's(SJM) U.S. coffee business rose 12 percent in the first quarter, increasing for the first time in 11 quarters, helped by higher realized prices of its Folgers and Dunkin' Donuts coffee and strong sales of Dunkin' Donuts K-Cup pods.
Strong coffee sales helped Smucker post better-than-expected profit and revenue for the quarter ended July 31, sending its shares up as much as 7.4 percent on Thursday.
The U.S. launch of Dunkin' Donuts K-Cup pods in May exceeded initial expectations and drove a large portion of the sales increase, Smucker Chief Executive Richard Smucker said. Dunkin' Donuts-branded coffee sales increased 78 percent.
Dunkin' Donuts', owned by Dunkin' Brands Group Inc(DNKN), signed deals with Smucker and Keurig Green Mountain Inc(GMCR) earlier this year, to sell Dunkin' K-Cups, single-serve coffee containers, online and in grocery stores and drugstores.
Smucker, the biggest U.S. roaster, cut prices for Folgers and Dunkin' Donuts coffee by 6 percent in the United States last month to woo back customers.
The company, considered an industry trendsetter, raised prices last year, a move it later described as a "misstep" after sales volumes dropped as customers switched to cheaper brands and delayed purchases.
However, Smucker said the net price realization for coffee in the quarter was higher by 1 percentage point compared with the same quarter a year earlier.
Higher prices offset volume decline with Folgers sales up 3 percent in the quarter, Smucker said in a post-earnings conference call.
Folgers volume sales were down 9 percent, due in part to price increases as well as cuts in the size of Folgers canisters.
Smucker, known for Jif peanut butter, Martha White flour and Crisco shortening brands, said net sales rose 47.5 percent to $1.95 billion.
That beat analysts' average estimate of $1.90 billion, according to Thomson Reuters I/B/E/S, also helped by the recent acquisition of the Big Heart Pet Brands.
Net income rose 17.6 percent to $136.4 million, or $1.14 per share, in the quarter. Excluding items, Smucker earned $1.32 per share, topping analysts' estimate of $1.23.
Smucker said it expects second-quarter results to be slightly lower than a year earlier, mainly as it has planned to significantly increase marketing expenses.
The company's shares were trading at $116.22 in morning trading. Up to Wednesday's close, they had risen 8 percent this year. (Reporting by Nayan Das in Bengaluru; Editing by Saumyadeb Chakrabarty and Savio D'Souza)
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