J.M. Smucker cuts annual guidance amid Hostess acquisition costs
Investing.com -- J.M. Smucker (NYSE:SJM) has slashed its full-year financial guidance, citing the impact of its $5.6 billion acquisition of Twinkies-maker Hostess Brands (NASDAQ:TWNK), although the food packaging giant still posted better-than-anticipated second-quarter income.
The cash-and-stock deal, which was first agreed upon in September, was viewed as a move by Smucker to improve volumes and counteract waning benefits from an inflation-driven surge in food prices. Investors largely balked at the price of the tie-up, which amounted to a 39% premium over Hostess's three-month average share price at the time.
In a statement on Tuesday, Smucker said it now expects to post annual adjusted earnings per share of $9.25 to $9.65, down from its prior outlook of $9.45 to $9.85. The jelly-and-peanut butter giant noted that this updated band reflects an unfavorable effect of $0.40 related to the Hostess purchase.
The forecast range for growth in comparable net sales was also lowered on the top end to 8.5% to 9.0%.
However, adjusted per-share earnings of $2.59 in the three months ended on Oct. 31 topped Bloomberg consensus estimates, thanks in part to elevated prices and a dip in green coffee costs that helped offset a 12% decline in net sales.
Shares in Smucker rose in U.S. premarket trading on Tuesday.
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