AUSTIN, Minn. – Hormel Foods Corp. reported record third quarter sales for the period ended July, 24, 2016, including strong results in its Refrigerated Foods, Jennie-O Turkey Store and International segments. The Refrigerated Foods operating profit increased 24 percent and volume was up 3 percent. Sales also increased by 9 percent for Q3 2016, compared with the same period in fiscal 2015. The Jennie-O Turkey Store operating profit was up 59 percent and the International segment reported an increase of 5 percent in operating profit.
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| Jeffrey Ettinger, chairman and CEO of Hormel |
“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 Ettinger, chairman of the board and CEO of Hormel. “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.”
The company reported record net earnings of $195.7 million, or 36 cents per diluted share, for the third quarter up 33 percent from net earnings of $146.9 million in Q3 2015, or 27 cents per diluted share. Dollar sales were up 5 percent to $2.3 billion from $2.18 billion in the same period last year.
On a segment basis, Refrigerated Foods were 50 percent of net sales and 44 percent of the total segment operating profit. Sales increased 9 percent thanks to successful brands such as Old Smokehouse bacon, Hormel Fire Braised meats, Hormel Natural Choice meats and Hormel Gatherings party trays, according to the company. Retail deli products and Lloyds barbecue ribs experienced sales declines in the quarter.
Jennie-O Turkey Store, which makes up 18 percent of net sales, reported a 59 percent increase in profit and 20 percent increase in sales. The segment’s value-added foodservice and deli products contributed to the quarter’s sales growth.
“International segment profit increased 5 percent and sales increased 5 percent,” the company said. “Exports of fresh pork, Skippy peanut butter, and the Spam family of products drove the improved results.”
The advertising expenses and transaction costs related to the May acquisition of Justin’s, LLC – maker of Justin’s brand nut butter spreads – were to blame for flat profit in the Grocery Products segment in the third quarter, according to the company. Sales grew 3 percent in the segment due in part to the addition of the Justin’s products, as well as additional Spam, Skippy and Wholly Guacamole products.
The Specialty Foods segment profit decreased 13 percent and sales for this segment also decreased 25 percent in Q3 2016. “Continued growth in Muscle Milk protein products did not offset reduced contract packaging sales and the divestiture of Diamond Crystal Brands,” the company said.
The company continues its positive outlook for the remainder of the fiscal year. “We expect a strong finish to fiscal 2016, led by valued-added sales in Refrigerated Foods, Jennie-O Turkey Store and International,” remarked James Snee, president and COO. “Franchises such as Skippy peanut butter products, Wholly Guacamole, and Muscle Milk protein products are positioned to drive sales growth for the fourth quarter,” Snee added.
“As a result of another excellent quarter we are increasing our 2016 annual guidance to $1.60 to $1.64 per share from $1.56 to $1.60 per share,” Snee said. “We expect to show sales and earnings growth in fiscal 2017 and will provide a more definitive guidance range on our fourth quarter conference call in November.”
