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ANNUAL REPORT OUR PORTFOLIO OF LEADING AND WHY WE ARE EMERGING BRANDS WHO WE ARE A culture of doing the right things and doing things right… Of dotting the i’s and crossing the t’s… A culture of growth—individual and as a company. A result of living our Basic Beliefs… Our Commitment to Each Other, to our consumers, and to our customers. As we look to the future of unlimited possibilities, we recognize the principles that are instrumental to our success: A culture deeply rooted in our Basic Beliefs, guideposts for decisions at every level; A culture that encourages commitment to each other, clear communication and collaboration; A culture of appreciation; A family-sense of sharing in a job well done; Where every person makes a difference. #1 #1 #1 #1 FOLGERS JIF Market Share SMUCKER'S MILK-BONE Market Share At-Home Market Share Market Share Peanut Butter Coffee Brand Fruit Spreads Dog Snacks OUR VISION Engage, delight, and inspire consumers through trusted food and beverage brands that bring joy throughout their lives. A portfolio that combines #1 and leading brands with emerging, on-trend brands to drive balanced growth. OUR PURPOSE Helping to bring families together to share memorable meals and moments. We have always defined success by more than financial performance. We believe how we do things is as important as what we do. Our Purpose aims to articulate why we are in business and the impact we aspire to have on society. Being together with the ones we love isn’t just a pleasant way to spend time—it’s vital to a healthy, happy, fulfilling life. In fact, the more family and friends spend time with each other, the richer their lives become. ® We believe we can help strengthen families through the memorable meals and moments they share, and we can help make every day a little more special by nurturing the bonds that bring people together, as well as people and their pets closer together. ™ And the stronger families are today, the stronger our society will be tomorrow. Quite simply, life tastes better together. #1 #2 12% 17% At least one of DUNKIN' CAFÉ SMUCKER’S our products can ROBIN HOOD DONUTS Market Share Market Share BUSTELO UNCRUSTABLES 5-Year Compound 15-Year Compound Flour in Canada Premium Bagged be found in 93% Annual Growth Rate Annual Growth Rate Coffee of all U.S. households. 2017 ANNUAL REPORT 1 DEAR SHAREHOLDERS AND FRIENDS, For the past 120 years, The J.M. Smucker Company satisfy cravings, promote health, and convey personal • In U.S. Retail Consumer Foods, we are leveraging our our $100 million goal. This brings cumulative synergies has grown and flourished thanks to an unwavering values. Brands once seen as status symbols now represent Jif® peanut butter brand to build a snacking platform achieved to date to approximately $160 million out of the commitment to making quality products that meet one’s values. that caters to consumers’ desire for on-the-go options total $200 million we expect to achieve by fiscal 2018. We and protein-packed foods. have targeted another $250 million in cost reductions by fiscal the evolving needs of our consumers. We recognize Against this backdrop, we see consumers in the future making • In U.S. Retail Pet Foods, consumers’ preferences for simple 2020 from our companywide cost management program. consumers’ eating habits have fundamentally changed choices that fit their nontraditional, fast-paced schedules; ingredients extend to the foods they buy for their pets. This will result in $450 million in total annual synergy and since our founding—and even over the past few years. meet highly specific wellness and functional needs; deliver New Milk-Bone® Farmer’s Medley™ treats are made with cost reductions by that year. We are developing an increasingly sophisticated convenience and quality in equal measure; and center on USA-sourced meat and contain no fillers, corn, or artificial view of the link between food and our consumers’ authentic brands with recognizable ingredients. These food flavors or preservatives. Savings under this $250 million cost management program trends diverge sharply from the past, which is why we have are expected to come from previously announced plant sense of purpose in their lives. These insights are developed a three-year strategic roadmap to capitalize on consolidations, accelerated operational efficiencies across A ROADMAP FOR FUTURE GROWTH helping us develop brands and products that align new marketplace opportunities and generate sustainable, the entire manufacturing network, organization optimization, At the highest level, our three-year plan is about balancing with the values of today’s consumers, giving us a profitable growth. revenue growth management, SKU rationalization, and a zero- a focus on top-line growth with a diligent approach to cost based budgeting program. We believe that this strategy will clear roadmap for the future. savings, allowing us to deliver our growth objectives regarding In fiscal 2017, we made great strides in bolstering a new capture the growth opportunities at hand and continue our earnings per share. It includes disproportionate investment product pipeline that reflects shifts in consumer preferences historical track record of strong value creation, which has enabled As consumer preferences are more influential than ever, in key growth segments across our portfolio, including our toward convenience, simple ingredients, and snacking. While us to return more than $3.1 billion to shareholders over the fiscal 2017 was a pivotal year of gearing up for future growth Jif, Smucker’s Uncrustables, Sahale Snacks®, and Milk-Bone more meaningful contributions are expected in the years past five fiscal years through dividends and share repurchases. as we continued to transform our business to reflect this brands, and all of our coffee brands. changing landscape while remaining true to our heritage ahead, the effectiveness of these initiatives already can be seen in the near term. A LONG-TERM VIEW and Our Purpose of helping to bring families together to share In e-commerce, we are redefining every aspect of our approach, As important as our new roadmap is for charting our course memorable meals and moments. We’re investing significantly • In U.S. Retail Coffee, Folgers® coffee responded to including organization, capabilities, and investment. With pet for the next three years, we will continue to pay attention to in product innovation and strengthening capabilities in areas consumers’ fondness for simple ingredients with food and pet snacks and coffee leading the way, our target the factors that have guided us for the past century: a focus such as data analytics, e-commerce, and digital marketing to Folgers Simply Gourmet™, a premium line of coffees is to generate 5 percent of net sales in fiscal 2020 through on the consumer, strong relationships with all our constituents, drive top-line growth while managing costs to fuel that growth. made with all-natural flavors. Meanwhile, Dunkin’ e-commerce. Already, subscription order models are proving and adherence to our culture and long-standing Basic Beliefs While top-line softness persisted throughout the fiscal year, Donuts® K-Cup® pods are satisfying demand for highly successful in this distribution channel; online sales of as we “Execute for Today, Build for Tomorrow.” This message both for our industry and for our business, we achieved convenient one-cup servings. Natural Balance® premium pet food grew roughly 60 percent encapsulates our plans for the near future as we expect to adjusted earnings per share in line with our projections for in fiscal 2017. the year by accelerating realized synergies related to the Big deliver on three key financial objectives: Heart Pet Brands acquisition and managing budgets and costs Other facets of the strategic plan include increasing capital • Achieve earnings per share growth in line with our efficiently. Specific highlights for fiscal 2017 include: FINANCIAL HIGHLIGHTS expenditures to add new manufacturing capacity, improving stated long-term objective; The J. M. Smucker Company • Achieved a 7 percent increase in adjusted earnings per flexibility and productivity at several existing manufacturing • Grow the top line, both organically and through share, excluding a prior year gain and noncash tax benefit; YEAR ENDED APRIL 30, facilities, and enhancing our information technology. Recently, acquisitions; and we broke ground on a new Smucker’s Uncrustables sandwiches • Grew key on-trend brands such as Smucker’s® (DOLLARS AND SHARES IN MILLIONS, • Achieve significant cost savings that will provide fuel for 2017 2016 manufacturing facility in Longmont, Colorado. When complete Uncrustables® sandwiches and Café Bustelo® coffee with EXCEPT PER SHARE DATA) investments in growth and support the bottom line. in 2020, this plant will provide the capacity to double sales both brands experiencing double-digit sales growth; Net sales $7,392.3 $7,811.2 of what is today a $220 million business. We also plan key Although our industry looks very different than it did a • Returned more than $775 million to our shareholders NET INCOME AND NET INCOME capital improvements at our coffee facilities in New Orleans, PER COMMON SHARE generation ago, we believe companies that embrace and in the form of dividends and share repurchases; and Louisiana, and peanut butter plant in Lexington, Kentucky, address today’s accelerating pace of change can and will • Attained $122 million in incremental synergies for the Net income $ 592.3 $ 688.7 that will improve efficiencies, lower costs, and enhance quality. thrive. In this environment, our strong portfolio of leading year, exceeding our original target, and embarked on Net income per common share – $ 5.10 $ 5.76 and emerging brands continues to serve us well, providing the next phase of our cost-reduction initiatives. assuming dilution Finally, we expect acquisitions to play an ongoing role in our the flexibility required to continuously adapt to changes in ADJUSTED INCOME AND future growth.