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Hormel Increases Earnings

23 August 2013

US - US-based global meat processing company Hormel Foods has reported third quarter net earnings in 2013 of $113.6 million, up by two per cent from net earnings of $111.2 million a year earlier.

However, higher input costs for pork production hit margins in the refrigerated foods sector.

For the nine months to 28 July, net earnings were $368.9 million, as compared to net earnings of $367.4 million the same period last year.

Diluted net earnings per share for the nine months were $1.37, equal to a year ago.

Sales for the quarter were $2.2 billion, up by eight per cent from the same period in 2012.

For the nine months, sales reached $6.4 billion, up by six per cent from the same period last year.

“We had a solid quarter, with all five segments reporting increased sales over last year,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer.

“We also generated improved earnings, with four of five segments posting increased operating profits.

“Earnings per share of $0.42 for the third quarter was in line with our expectations and keeps us on pace with our full year adjusted guidance range.

“Our Grocery Products segment benefitted from good performance by our new SKIPPY® business.

“Our Jennie-O Turkey Store segment delivered a strong quarter, despite higher grain costs and lower commodity meat prices.

“Our International business continues to achieve impressive results, led by strong export sales of our SPAM® family of products and fresh pork, as well as the addition of the SKIPPY® business.

“Higher pork input costs squeezed margins for our retail value-added products, particularly bacon, decreasing our Refrigerated Foods segment results during the quarter,” Mr Ettinger said.

“We are excited about the recent roll-out of our HORMEL® REV® snack wraps during the quarter, which is supported by a national advertising campaign that began in late July. I am also pleased with the progress our team has made in integrating and growing sales of SKIPPY® products, both in the U.S. and internationally,” Mr Ettinger said.

He added:“Earnings reported in the third quarter keep us on track to achieve results consistent with our adjusted annual guidance range of $1.88 to $1.96 per share.

“Toward the end of the third quarter we were able to adjust for higher raw material costs in key product categories such as bacon.

“We anticipate Jennie-O Turkey Store will continue to rebound from headwinds faced earlier in the year, which should benefit results through the rest of fiscal 2013.

“We expect four of five segments to outperform in the fourth quarter, with only Specialty Foods expected to experience a down quarter.

“We are excited about the new products that we are introducing to the marketplace this year, such as our HORMEL® REV® snack wraps and HORMEL® FIRE BRAISED meats,” Mr Ettinger said.

“We have solid marketing and promotional plans in place to drive sales of our value-added products in the fourth quarter.”

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