Home » Black Swans » Smuckers Too Much Sugar for Now. Interest Coverage Tricks $SJM

Smuckers Too Much Sugar for Now. Interest Coverage Tricks $SJM

English: Smuckers sign

English: Smuckers sign (Photo credit: Wikipedia)

Smuckers (NYSE:SJM) is in the business of selling sugar driven consumer edibles. Here is the diabetes effect for investors. Last Oct 2011 the company issued a ton of debt. Y/o/Y long-term debt is up some $700 million. Normally this has an impact, a big impact on EBITDA. MDA says they have it under control because of swaps and they are capitalizing interest on capital expenditures. But the debt holder is expecting regular cash interest payments. So the numbers are tricked into looking good.

Now because they are disclosing it it’s probably not illegal. But it’s just accounting tricks to get through the quarter or year. If you look at the fundamentals cash and working capital are down significantly.

Seems this company not only has trouble selling coffee they have trouble smelling the coffee.

George Gutowski writes from a caveat emptor perspective.

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