PENNSAUKEN – Think your food bill is high?
A South Jersey snack company says its annual profit has plunged due to soaring prices for sugar, flour and other ingredients needed for its products.
J&J Snack Foods Corp. of Pennsauken, while reporting strong sales growth for fiscal 2022, also noted the impact of rising labor, fuel, packaging and shipping costs.
Among other responses, J&J has increased its use of automation, further centralized its purchasing operations and raised prices, said Dan Fachner, CEO of the company.
Fachner cited “an incredibly challenging operating environment” in announcing the company’s results on Monday.
“In particular, we’re seeing double-digit cost increases for ingredients such as oils, sweeteners and flour,” Fachner said, noting that the price of some staples has risen about 40% from to the previous year.
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He also noted an “unprecedented escalation” in shipping costs, “driven by diesel prices, freight costs and a worsening driver shortage.”
Distribution costs have risen more than 30% since 2019, said Ken Plunk, the company’s chief financial officer.
J&J sells snacks including soft pretzels, churros, frozen drinks and frozen novelties.
The company’s net sales rose 20.6% to $1.38 billion for the year ended Sept. 24.
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But net income for the period fell 15.1%, to $47.2 million or $2.46 per share.
Plunk noted improved conditions for J&J’s catering unit, which produced more than 60% of annual sales. The business segment serves arenas, restaurants, convenience stores and other customers.
“People are coming out, they’re coming out in droves, they’re coming out in greater numbers, and they’re spending more,” he said, while noting that the theater industry is still recovering from the pandemic.
J&J also has retail and frozen beverage segments.
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The company reported net revenue of $400.4 million in the fourth quarter, an increase of nearly 24%. It posted an 8.3% drop in fourth-quarter net income of $40.1 million, or 90 cents per share.
Jim Walsh is a senior reporter for the Courier-Post, the Burlington County Times and the Daily Journal.