Tariffs and green coffee costs drive Smucker's quarterly loss

Business Journals

2 days ago

Story Highlights J.M. Smucker Co. reported $729 million fourth-quarter loss largely due to tariffs.
Smucker's shares fell 15% following the earnings report.
Company plans 20% price increase on coffee brands by 2026.
J.M. Smucker Co. shares slid Tuesday after the Orrville, Ohio-based food maker reported a fiscal fourth-quarter loss largely because of tariffs and higher prices for buying green coffee, which is not produced in the United States.
Shares of Smucker (NYSE: SJM) fell more than 15% to $94.41 in regular trading on Tuesday at more than 10 times the shares' average daily trading volume.
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Smucker reported a net loss of $729 million, or $6.85 a diluted share, in the fiscal fourth quarter, ended April 30, compared with the same period in 2024. The company's net sales fell 3% to $2.1 billion over the same period.
Smucker's tariff exposure is multifaceted
Smucker's tariff exposure is complicated, Tucker Marshall, Smucker's CFO, told securities analysts during a Tuesday conference call.
First, the main ingredients in Smucker's food items — what the company calls "direct materials" — are exposed to tariffs.
"The primary driver there is green coffee, which we view as an unavailable natural resource in the United States, so we procure [it] from Brazil and Vietnam, among others," Marshall said Tuesday.
Second, retaliatory tariffs are pressuring sales of Smucker's goods — particularly peanut butter, ice cream toppings and coffee — that are sold in Canada, he said.
Third, Smucker is paying tariff-hiked prices for its co-manufactured foods produced outside the United States, namely liquid coffee and wet cat food, Marshall said.
"The greatest [tariff] exposure that we have in the portfolio is across those first three areas, but the leading driver is green coffee," he said.
As a result, Smucker plans to raise the prices of its Folgers, Dunkin' and Café Bustelo coffees by 20% during the full fiscal 2026 year, which would end in April 2026, Marshall said.
More than coffee prices created Smucker's quarterly loss
On top of those pressures, Smucker is paying tariff-boosted prices for capital goods — equipment, machinery and the like — that it buys primarily from the European Union and uses in its manufacturing plants, Marshall said.
Even without the effects of tariffs and green coffee inflation, Smucker likely would have reported a fourth-quarter loss. The company took $980 million in non-cash charges to write off goodwill related to the acquisition of Hostess and other companies in its Sweet Baked Snacks reporting unit.
The financial challenges — some out of Smucker's control — clouded what CEO Mark Smucker called "a year of significant progress as we delivered positive results in a challenging environment."
Smucker reported a net loss of $1.2 billion, or $11.57 a diluted share, in fiscal 2025, ended April 30. Net sales grew 7% to $8.7 billion in that period.
"Our performance reflects top-line growth supported by strong consumer demand for our portfolio of leading brands, and bottom-line growth driven by disciplined cost management and execution," CEO Smucker said in a statement.
In addition, the Orrville company "reignited innovation that is resonating with our consumers" in the just-ended year, "resulting in one of our most successful years of innovation in recent history," Smucker said.
"We launched Jif Peanut Butter and Chocolate Flavored Spread, new varieties of Uncrustables sandwiches, Café Bustelo multi-serve coffee and Milk-Bone Peanut Buttery Bites, just to name a few, all of which are exceeding expectations," he said.
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