JM Smucker Company (SJM)
Interest coverage
| Apr 30, 2025 | Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | -777,700 | 355,200 | 1,217,600 | 1,336,600 | 1,260,700 | 207,000 | 225,000 | 233,100 | 142,800 | 1,084,300 | 920,100 | 936,600 | 1,004,700 | 942,200 | 1,198,100 | 1,237,600 | 1,349,000 | 1,457,300 | 1,339,900 | 1,319,500 |
| Interest expense (ttm) | US$ in thousands | 388,700 | 391,800 | 396,200 | 332,600 | 264,300 | 202,300 | 140,400 | 145,000 | 152,000 | 154,700 | 156,300 | 156,900 | 160,900 | 165,300 | 169,300 | 174,100 | 177,100 | 180,300 | 181,900 | 185,900 |
| Interest coverage | -2.00 | 0.91 | 3.07 | 4.02 | 4.77 | 1.02 | 1.60 | 1.61 | 0.94 | 7.01 | 5.89 | 5.97 | 6.24 | 5.70 | 7.08 | 7.11 | 7.62 | 8.08 | 7.37 | 7.10 |
April 30, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-777,700K ÷ $388,700K
= -2.00
The interest coverage ratios of JM Smucker Company over the specified periods reveal notable fluctuations, reflecting shifts in the company's ability to meet its interest obligations from its earnings before interest and taxes (EBIT).
Between July 31, 2020, and October 31, 2021, the ratio remained relatively stable, predominantly in the range of approximately 7.10 to 8.08, indicating a strong ability to cover interest expenses with EBIT. These levels suggest that during this period, the company had a comfortable margin of earnings relative to interest obligations, which is generally considered a sign of financial stability.
However, a significant decline is observed starting January 31, 2022, with the ratio decreasing to 5.70, indicating a reduction in earnings available to cover interest. This downward trend becomes more pronounced with the ratio dropping below 2.00 on April 30, 2023, reaching a low of 0.94. Such a low interest coverage ratio implies that EBIT was barely sufficient to cover interest expenses, raising concerns about the company's capacity to service its debt during this period.
Post-April 30, 2023, there is some recovery, with ratios increasing to 1.61 in July 2023, 1.60 in October 2023, and further to 4.77 by April 30, 2024. These rebound levels suggest improvements in profitability or reductions in interest expenses, allowing the company to better meet its interest obligations. Nonetheless, the ratios remain comparatively low, indicating ongoing challenges in maintaining a robust margin of earnings for debt servicing.
However, the trend again turns negative after that, with the ratio declining to 0.91 on January 31, 2025, and turning negative to -2.00 by April 30, 2025. The negative interest coverage ratio signals that EBIT was insufficient to cover interest expenses, implying potential difficulties in debt servicing and increased financial risk.
Overall, the company's interest coverage has demonstrated substantial variability over this period, with periods indicating strong coverage, followed by notably weakened measures, especially from early 2023 onwards. The fluctuations highlight fluctuations in operating performance and earnings capacity, with recent readings suggesting heightened financial vulnerability with regard to interest obligations.