UPDATE 2-Smucker cuts forecast as peanut butter, fruit spread sales lag
* Cuts full-year profit forecast to $5.55-$5.60/share vs est. $5.78
* Says now expects 2014 sales to fall 5 pct
* Third-quarter adjusted earnings $1.66/share vs est. $1.68
* Revenue slides 6 pct to $1.47 bln vs est. $1.53 bln
* Shares fall as much as 8 pct
Feb 14 (Reuters) - J.M. Smucker Co forecast full-year results below analysts' estimates, citing increased competition in its peanut butter business and a shift in consumer preference away from artificially sweetened fruit spreads.
Shares of the maker of Jif peanut butter and Folgers coffee fell as much as 8 percent on Friday, after the company also reported weaker-than-expected quarterly results.
Smucker had signed longer-term peanut purchase contracts, which meant that unlike rivals, the company did not benefit from a drop in prices.
Smucker competes with companies such as Hormel Foods Corp , owner of the Skippy peanut butter brand, and ConAgra Foods Inc that owns the Peter Pan brand.
"We anticipate this heightened level of competitive activity will continue through the fourth quarter," Chief Operating Officer Vincent Byrd said on a conference call.
Smucker also said its fruit spreads business, mainly the Better for You division of sugar-free and low-sugar products, was hurt as consumers moved away from artificially sweetened items.
Sales for Smucker's fruit spreads and Jif peanut butter declined 7 percent in the third quarter ended Jan. 31, with volumes falling 2 percent and 1 percent, respectively.
Smucker said it now expected revenue to fall by 5 percent in the year ending April, which translates to sales of about $5.60 billion. The company forecast a 2 percent decline in 2014 sales in November.
Analysts were expecting full-year revenue of $5.78 billion, according to Thomson Reuters I/B/E/S.
Smucker also cut its full-year adjusted earnings forecast to $5.55-$5.60 per share from $5.72-$5.82, below the average analyst estimate of $5.78 per share.
Last year, the company reduced list prices for most of its packaged coffee sold in the United States to pass on the benefit of lower commodity costs to customers.
Sales from Smucker's U.S. retail coffee business fell 8 percent in the third quarter. The division sells Folgers coffee and supplies packaged coffee to Dunkin' Brands Group Inc's Dunkin' Donuts outlets.
Volumes in the Folgers brand rose 4 percent and those in the Dunkin' Donuts packaged coffee business increased 8 percent.
The Orrville, Ohio-based company's net income rose to $166.7 million, or $1.59 per share, in the quarter from $154.2 million, or $1.42 per share, a year earlier.
Excluding items, Smucker earned $1.66 per share.
Revenue fell 6 percent to $1.47 billion.
Analysts on average had expected a profit of $1.68 per share on revenue of $1.53 billion.
Smucker's shares were down 7 percent at $88.47 on Friday morning on the New York Stock Exchange.