AUGUST 20, 2010, 7:49 A.M. ET.

Smucker's Earnings Rise 5%

By TESS STYNES

J.M. Smucker Co.'s fiscal-first-quarter earnings rose 5% as the food company benefited from stronger margins and a lower tax rate.

The maker of jams, jellies, Jif peanut butter, Crisco oils and Pillsbury products has received a lift in recent quarters from lower commodity costs and its 2008 acquisition of the Folgers coffee brand. The Orrville, Ohio, company's three-year restructuring effort and consolidation of its coffee production are expected to save some $60 million a year.

The food industry nevertheless faces a challenge from newly rising commodities costs, and Smucker recently said it would raise prices on an array of coffee products to reflect higher costs, on top of price increases in May.

For the quarter ended July 31, Smucker reported a profit of $102.9 million, or 86 cents a share, up from $98.1 million, or 83 cents, a year earlier. Excluding items such as restructuring and acquisition-related charges, earnings rose to $1.04 from 92 cents. Revenue was flat at $1.05 billion.

Gross margin, or the difference between what it costs a company to produce its products and the prices it receives for them, rose to 39% from 38.6%. Smucker's tax rate fell to 31.3% from 35.2%.

Sales at the company's U.S. retail coffee business, its biggest, rose 7%, aided by recent price increases, while profit was up 1% as the sales growth offset rising costs. Volume increased 5%, mostly owing to its Folgers and Dunkin' Donuts brands.

In Smucker's U.S. retail consumer segment, which includes its peanut-butter and jelly brands, sales fell 4% and volume declined 3% amid divestitures. Earnings rose 8% as lower raw-materials costs more than offset increased spending on marketing.

Write to Tess Stynes at tess.stynes@dowjones.com

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