The J. M. Smucker Company (SJM) has reported 27.36 percent fall in profit for the quarter ended Jan. 31, 2017. The company has earned $134.60 million, or $1.16 a share in the quarter, compared with $185.30 million, or $1.55 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $232.80 million, or $2 a share compared with $246 million or $2.05 a share, a year ago.

Revenue during the quarter dropped 4.82 percent to $1,878.80 million from $1,973.90 million in the previous year period. Gross margin for the quarter contracted 22 basis points over the previous year period to 38.48 percent. Total expenses were 87.35 percent of quarterly revenues, up from 83.87 percent for the same period last year. That has resulted in a contraction of 347 basis points in operating margin to 12.65 percent.

Operating income for the quarter was $237.70 million, compared with $318.30 million in the previous year period.

However, the adjusted operating income for the quarter stood at $382.80 million compared to $408.30 million in the prior year period. At the same time, adjusted operating margin contracted 31 basis points in the quarter to 20.37 percent from 20.68 percent in the last year period.

"Accelerating the realization of synergies and a concentrated effort to reduce costs across the Company support our ability to deliver bottom-line growth, despite the top-line softness in our business and across the industry," said Mark Smucker, chief executive officer.

For financial year 2017, the company forecasts diluted earnings per share to be in the range of $5.38 to $5.48. The company forecasts diluted earnings per share to be in the range of $7.60 to $7.70 on adjusted basis.

The company has spent $148.10 million cash to meet investing activities during the nine month period as against cash inflow of $30.70 million in the last year period It has incurred net capital expenditure of $136.20 million on net basis during the nine month period, down 15.19 percent or $24.40 million from year ago period.

The company has spent $612.40 million cash to carry out financing activities during the nine month period as against cash outgo of $1,131.70 million in the last year period.

Cash and cash equivalents stood at $139.60 million as on Jan. 31, 2017, down 0.64 percent or $0.90 million from $140.50 million on Jan. 31, 2016.

Working capital declines
The J. M. Smucker Company has witnessed a decline in the working capital over the last year. It stood at $693.70 million as at Jan. 31, 2017, down 12.46 percent or $98.70 million from $792.40 million on Jan. 31, 2016. Current ratio was at 1.70 as on Jan. 31, 2017, down from 1.79 on Jan. 31, 2016.

Cash conversion cycle (CCC) has decreased to 34 days for the quarter from 75 days for the last year period. Days sales outstanding were almost stable at 25 days for the quarter, when compared with the last year period.

Days inventory outstanding has decreased to 40 days for the quarter compared with 76 days for the previous year period. At the same time, days payable outstanding went up to 31 days for the quarter from 27 for the same period last year.

Debt comes down marginally
The J. M. Smucker Company has recorded a decline in total debt over the last one year. It stood at $5,087 million as on Jan. 31, 2017, down 3.73 percent or $197.30 million from $5,284.30 million on Jan. 31, 2016. Total debt was 32.17 percent of total assets as on Jan. 31, 2017, compared with 32.46 percent on Jan. 31, 2016. Debt to equity ratio was at 0.70 as on Jan. 31, 2017, down from 0.72 as on Jan. 31, 2016. Interest coverage ratio deteriorated to 5.90 for the quarter from 7.30 for the same period last year.