AUSTIN, Minn.--(BUSINESS WIRE)--Hormel Foods Corporation reported record performance for the fiscal year 2016 third quarter.
All comparisons are to the third quarter of fiscal 2015. All earnings per share measures have been adjusted to reflect the two-for-one stock split distributed on February 9, 2016.
SUMMARY
- Record diluted earnings per share of $0.36, up 33 percent from $0.27 per share.
- Record net earnings of $195.7 million, up 33 percent from net earnings of $146.9 million.
- Record dollar sales of $2.3 billion, up 5 percent; volume up 1 percent.
- Refrigerated Foods operating profit up 24 percent; volume up 3 percent; dollar sales up 9 percent.
- Jennie-O Turkey Store operating profit up 59 percent; volume up 29 percent; dollar sales up 20 percent.
- International & Other operating profit up 5 percent; volume up 10 percent; dollar sales up 5 percent.
- Grocery Products operating profit flat; volume up 1 percent; dollar sales up 3 percent.
- Specialty Foods operating profit down 13 percent; volume down 32 percent; dollar sales down 25 percent. Decreases reflect the impact from the divestiture of the Diamond Crystal Brands business.
COMMENTARY
“We are pleased to announce exceptional results this quarter with three of our five segments delivering volume, sales and earnings growth. This is also our thirteenth consecutive quarter of record earnings which is a testament to our balanced business model,” said Jeffrey M. Ettinger, chairman of the board and chief executive officer. “Excellent results in Refrigerated Foods were driven by the addition of the Applegate business, foodservice sales of OLD SMOKEHOUSE® bacon, HORMEL® BACON 1™ fully cooked bacon, and HORMEL® FIRE BRAISED™ meats, and retail sales of HORMEL® NATURAL CHOICE®meats. Jennie-O Turkey Store also returned to growth, posting strong double-digit sales and earnings increases,” stated Ettinger.
“Iconic brands such as SPAM® and SKIPPY® drove increased sales in our Grocery Products and International segments. We enjoyed strong growth from MUSCLE MILK® protein products led by innovative new items such as MUSCLE MILK® protein smoothies, though Specialty Foods did not show growth this quarter due to the sale of Diamond Crystal Brands,” commented Ettinger.
SEGMENT OPERATING HIGHLIGHTS – THIRD QUARTER
Refrigerated Foods (50% of Net Sales, 44% of Total Segment Operating Profit)
Refrigerated Foods segment profit increased 24 percent aided by the inclusion of the Applegate business, favorable market conditions, and growth in value-added products. Results reflect a favorable comparison to the prior year, which included Applegate transaction costs of $8.6 million. Sales increased 9 percent on continued success in foodservice products includingOLD SMOKEHOUSE® bacon and HORMEL® FIRE BRAISED™ meats, and retail products such as HORMEL® NATURAL CHOICE® meats and HORMEL GATHERINGS® party trays. Brands experiencing declines in sales include retail deli products and LLOYDS® barbeque ribs.
Jennie-O Turkey Store (18% of Net Sales, 20% of Total Segment Operating Profit)
Jennie-O Turkey Store segment profit increased 59 percent and sales increased 20 percent following the recovery from highly pathogenic avian influenza in fiscal 2015. JENNIE-O® value-added foodservice and deli products contributed to sales growth during the quarter. Results reflect a $9.6 million mark-to-market loss on hedges.
International & Other (6% of Net Sales, 7% of Total Segment Operating Profit)
International segment profit increased 5 percent and sales increased 5 percent. Exports of fresh pork, SKIPPY® peanut butter, and the SPAM® family of products drove the improved results.
Grocery Products (17% of Net Sales, 19% of Total Segment Operating Profit)
Grocery Products segment profit was flat for the quarter due to an increase in advertising spend and transaction costs related to the Justin’s, LLC acquisition. Sales grew 3 percent led by the inclusion of JUSTIN’S® products in addition to increases in theSPAM® family of products, SKIPPY® peanut butter, and WHOLLY GUACAMOLE® dips.
Specialty Foods (9% of Net Sales, 10% of Total Segment Operating Profit)
Specialty Foods segment profit decreased 13 percent and sales decreased 25 percent. Continued growth in MUSCLE MILK®protein products did not offset reduced contract packaging sales and the divestiture of Diamond Crystal Brands. Full report.
