The J. M. Smucker Co. engages in the manufacture and marketing of food and beverage products. It operates through the following segments: U.S. Retail Coffee, U.S. Retail Consumer Foods, U.S. Retail Pet Foods, and International and Away From Home. The U. S. Retail Coffee segment includes domestic sales of Folgers, Dunkin' Donuts, and Café Bustelo branded coffee. The U.S. Retail Consumer Foods segment sells Smucker's, Jif, and Crisco branded products. The U.S. Retail Pet Foods comprises Rachael Ray Nutrish, Meow Mix, Milk-Bone, Natural Balance, Kibbles 'n Bits, 9Lives, Nature's Recipe, and Pup-Peroni branded products. The International and Foodservice segment covers products distributed domestically and in foreign countries through retail channels and foodservice distributors and operators. The company was founded by Jerome Monroe Smucker in 1897 and is headquartered in Orrville, OH.
We may be unable to grow market share of our products.
Our proprietary brands, packaging designs, and manufacturing methods are essential to the value of our business, and the inability to protect these could harm the value of our brands and adversely affect our sales and profitability.
We use a single national broker to represent a portion of our branded products to the retail grocery trade and any failure by the broker to effectively represent us could adversely affect our business.
Loss or interruption of supply from single-source suppliers of raw materials and finished goods could have a disruptive effect on our business and adversely affect our results of operations.
Our results may be adversely impacted as a result of increased cost, limited availability, and/or insufficient quality of raw materials, including commodities and agricultural products.
Our efforts to manage commodity, foreign currency exchange, and other price volatility through derivative instruments could adversely affect our results of operations and financial condition.
We may be limited in our ability to pass cost increases on to our customers in the form of price increases or may realize a decrease in sales volume to the extent price increases are implemented.
Certain of our products are produced at single manufacturing sites.
A significant interruption in the operation of any of our supply chain or distribution capabilities could have an adverse effect on our business, financial condition, and results of operations.
Our business could be harmed by strikes or work stoppages.
Our ability to competitively serve customers depends on the availability of reliable transportation. Increases in logistics and other transportation-related costs could adversely impact our results of operations.
Our operations are subject to the general risks of the food industry.
Changes in our relationships with significant customers, including the loss of our largest customer, could adversely affect our results of operations.
We operate in the competitive food industry and continued demand for our products may be affected by our failure to effectively compete or by changes in consumer preferences.
The success of our business depends substantially on consumer perceptions of our brands.
We could be subject to adverse publicity or claims from consumers.
We may not be able to attract, develop, and retain the highly skilled people we need to support our business.
Our operations are subject to the general risks associated with acquisitions and divestitures. Specifically, we may not realize all of the anticipated benefits of the Ainsworth acquisition or those benefits may take longer to realize than expected.
We may not realize the benefits we expect from our cost reduction and other cash management initiatives.
Weak financial performance, downgrades in our credit ratings, or disruptions in the financial markets may adversely affect our ability to access capital in the future.
Our substantial debt obligations could restrict our operations and financial condition. Additionally, our ability to generate cash to make payments on our indebtedness depends on many factors beyond our control.
A material impairment in the carrying value of acquired goodwill or other intangible assets could negatively affect our consolidated operating results and net worth.
Changes in tax, environmental, or other regulations and laws, or their application, or failure to comply with existing licensing, trade, and other regulations and laws could have a material adverse effect on our financial condition.
Our operations in certain developing markets expose us to regulatory risks.
Changes in climate or legal, regulatory, or market measures to address climate change may negatively affect our business and operations.
If our information technology systems fail to perform adequately or we are unable to protect such information technology systems against data corruption, cyber-based attacks, or network security breaches, our operations could be disrupted, and we may suffer financial damage or loss because of lost or misappropriated information.
This discussion and analysis deals with comparisons of material changes in the consolidated financial statements for the years ended April 30, 2019 and 2018. For the comparisons of the years ended April 30, 2018 and 2017, see the Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2018 Annual Report on Form 10-K.
Amounts may not add due to rounding.
Net sales in 2019 increased $480.9, or 7 percent, reflecting a $747.0 contribution from the Ainsworth acquisition, partially offset by the impact of $254.0 of noncomparable net sales in the prior year related to the divestiture of the U.S. baking business during the second quarter of 2019. Net sales excluding acquisition, divestiture, and foreign currency exchange was comparable to the prior year, as the impact of lower net price realization, which reduced net sales by 1 percentage point, was offset by the impact of favorable volume/mix, which contributed 1 percentage point to net sales. The lower net price