AUSTIN, Minn. – Hormel Food Corp. reported 9 percent growth in profits for the fourth quarter ended Oct. 25 on strong performances from multiple brands, including Spam, Hormel pepperoni and Dinty Moore stew.
Overall, fourth quarter net income was $187.23 million, or 69 cents per share, compared to $171.26 million, or 63 cents per share in the fourth quarter of 2014.
On a segment basis, this year’s avian influenza outbreak weighed on Jennie-O Turkey Store performance, where profit dropped 23 percent and sales declined 18 percent.
On the upside, Hormel’s Grocery Products recorded a 57 percent increase in profit on favorable raw materials costs, improved plant efficiencies and higher equity in earnings. Sales climbed 4 percent on contributions from Dinty Moore, Hormel chili, Wholly Guacamole and the MegaMex Foods joint venture.
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| Jeffrey M. Ettinger, chairman and CEO, Hormel Foods |
“Strong contributions to these full-year results were made both by such long-standing company brands as Spam luncheon meat, Hormel pepperoni, and Dinty Moore stew, and also by more recently created or acquired product lines such as Hormel Gatherings party trays, Hormel Natural choice meats, Wholly Guacamole dips, and Muscle Milk protein nutrition products,” Jeffrey Ettinger, chairman and CEO, said in a statement. “We did face some headwinds during the year, including lower revenues impacted by declining pork markets and the loss of sales and operational efficiency related to highly pathogenic avian influenza in the Jennie-O Turkey Store segment. Our experienced team navigated these challenges to post this impressive bottom line performance.”
Strong demand for Applegate natural and organic lunch meats lifted profits in the Refrigerated Foods segment 27 percent. Higher pork operating margins and improved product mix also drove results. Sales volumes advanced 2 percent while dollar sales declined 5 percent on lower pricing compared to record high pork markets in 2014 and the dissolution of the Precept Foods joint venture. Sales growth of value-added items were led by Hormel refrigerated entrees, pepperoni and Hormel Gatherings party trays, and foodservice sale of Hormel Fire-Braised meats and pizza toppings.
Specialty Foods posted a 63 percent segment profit increase, while International and other businesses reported segment profits 3 percent above year-ago results for the quarter.
Ettinger said the company set fiscal 2016 earnings guidance at $2.85 to $2.95 per share. Effective Nov. 16, the company paid its 349th consecutive quarter dividend at the annual rate of $1.
“I am pleased with our momentum heading into fiscal 2016, and we should enjoy renewed revenue growth as the year proceeds,” Ettinger said. “We expect lower input costs to provide a tailwind for our Grocery Products and Refrigerated Foods value-added businesses next year, offsetting modestly lower pork operating margins. Strong demand for our Applegate natural and organic products will be an additional growth catalyst for the Refrigerated Foods segment. We look for Jennie-O Turkey Store to return to growth in the back half of fiscal 2016 if there are no significant recurrences of avian influenza, benefitting from strong demand for branded Jennie-O products and low grain costs.
“Specialty Foods should deliver increases through the growth of its Muscle Milk protein nutrition products, and we expect International to achieve year-over-year improved results through the expansion of our business in China along with increased sales of our Spam and Skippy family of products.”
