J.M. Smucker Co. nearly tripled its profit in the second quarter as the addition of Folgers coffee gave a jolt to its lineup and lower commodity prices for coffee beans and other items fattened its profit margins.
The company also raised its outlook for the year, sending its shares soaring Friday.
Smucker _ which makes products such as Jif peanut butter, Pillsbury frosting and its namesake jams and jellies _ said it continues to benefit during tough times as consumers are eating at home more and placing greater emphasis on value.
The company's brands are "perfectly matched during this recessionary environment" and that it remains in a strong position as consumers are expected to continue their spend-less and eat-at-home ways in the near future, Janney Montgomery Smith analyst Mitchell B. Pinheiro said in a note to investors.
Shares of Smucker rose $2.87, or more than 5 percent, to close at $56.35 Friday.
The company, based in Orrville, Ohio, earned $140 million, or $1.18 per share, for the quarter, up sharply from $51.5 million, or 94 cents per share, earned last year.
Excluding merger and integration costs related to Folgers, profit was $1.22 per share.
Sales grew 52 percent to $1.28 billion, helped significantly by coffee sales.
The performance topped the expectations of analysts polled by Thomson Reuters, who forecast a profit of $1.04 per share on sales of $1.24 billion.
Smucker purchased Folgers last year from Procter & Gamble, and the coffee segment's performance has exceeded expectations, Smucker's management said. In a sign of just how much Folgers has helped Smucker's results, the company said revenue was down 6 percent for the quarter when removing Folgers and a small effect from foreign currency translation.
Folgers and Dunkin' Donuts coffee drove the majority of the revenue and profit margin increases.
But the company said it saw volume of sales increase across much of its business, with increased popularity of its Pillsbury, Crisco, Jif, and Hungry Jack brands grew, partially offsetting decreases in canned milk, fruit spreads, and its food-service and natural-foods businesses.
The profitability of the coffee business improved during the quarter thanks to growing popularity, lower prices for coffee beans and volume-related plant efficiencies. And Smucker said it also saw lower raw ingredient prices for certain items such as flour and canned milk improve its margins in some of its core food business.
Smucker leadership said the company has and will continue to invest heavily in marketing to promote its products during the holiday baking season.
Smucker boosted its 2010 earnings outlook to a range of $3.95 to $4.05 per share, which excludes 17 cents to 19 cents per share for merger and integration costs related to Folgers. Its prior forecast was for a profit of $3.65 to $3.80 per share. The company anticipates annual sales of about $4.5 billion.
Analysts predict earnings of $3.83 per share on revenue of $4.55 billion for the year.
AP Retail Writer Michelle Chapman contributed to this report from New York.