February 24, 2014   

Hormel reports Q1 fiscal 2014's 18% rise in net earnings

 

 

 

Hormel Foods reported net earnings of US$153.3 million during the first quarter of fiscal 2014, an increase of 18% from an earlier year's net earnings of US$129.7 million.

 

The company's diluted earnings per share for the quarter were US$0.57, up 19% compared to US$0.48 last year. Sales for the quarter were US$2.2 billion, up 6% from the same period in fiscal 2013.

 

According to Jeffrey M. Ettinger, chairman of the board, president and chief executive officer:

 

"Four of our five segments generated growth in sales and operating profits as we continue to deliver quality products with trusted brands to our customers and consumers."

 

Despite higher beef and pork input costs compressing the margins of many core products,

 

Grocery Products segment profit increased 13%. Sales were up 20% this quarter, aided by the addition of the Skippy^® peanut butter line of products and increases in Hormel^® bacon toppings, Hormel^® chili and the Herdez^® line of products within the MegaMex Foods joint venture. Sales of their Spam^® family of products and Hormel^® Compleats^® microwave meals were soft this quarter.

 

Refrigerated Foods delivered excellent results this quarter, with segment profit up 59%, driven by higher pork operating margins, continued strong demand for our bacon products, and growth in our foodservice business. Sales for the quarter were up 6%, led by retail sales of Black Label^® bacon items, Hormel^® Rev^® snack wraps, and Lloyds^® ribs along with foodservice sales of Hormel^® Fire BraisedTM meats and Old Smokehouse^® Pecanwood Smoked Bacon.

 

The Jennie-O Turkey Store segment made additional investments in its brand this quarter, kicking off a new 'make the switch'^® media campaign in January featuring lean ground turkey. Sales for the quarter increased 2%, led by sales of Jennie-O Turkey Store® fresh lean ground turkey tray packs and chubs and turkey bacon. Jennie-O Turkey Store segment profit increased 1%, with the benefit of lower feed costs offset by lower live production performance due to sustained, extreme cold weather.

 

The Specialty Foods segment posted operating profits 11% lower than last year with a 16% decrease in sales. Lower segment results were due to the July 2013 expiration of the agreement allowing Diamond Crystal Brands to sell certain sugar substitutes into foodservice trade channels.

 

The International & Other segment reported strong segment profits 32% ahead of last year, on a sales increase of 24%. Results were driven by robust export sales of our Spam^® and Skippy^® product lines.

 

The company is anticipating tighter pork raw material supplies over the next few months, but the overall impact to their industry remains to be seen, said Ettinger. Unusually cold weather and higher fuel costs will continue to inflate cost of goods in their Jennie-O Turkey Store segment in the second and third quarters, commented Ettinger.