All comparisons are to the fourth quarter or full year of fiscal 2015. The fourth quarter and full year of 2016 contains an extra week as compared to the prior year. All earnings per share measures are adjusted to reflect the two-for-one stock split distributed on February 9, 2016.
For the quarter Hormel reached record dollar sales of $2.6 billion, up 9 percent; volume up 9 percent. Refrigerated Foods operating profit increased 51 percent; volume up 9 percent; dollar sales up 8 percent. Jennie-O Turkey Store operating profit rose 26 percent; volume up 32 percent; dollar sales up 29 percent.
“We had a strong finish to fiscal 2016, achieving record earnings for the fourteenth consecutive quarter,” said Jim Snee, president and chief executive officer. “Three of our five business segments delivered sales, volume, and earnings growth, again demonstrating our balanced business model. Refrigerated Foods and Jennie-O Turkey Store both had excellent quarters with growth coming from value-added, branded products and improved market conditions. Grocery Products enjoyed a strong quarter aided by the inclusion of the JUSTIN’S specialty nut butter business in addition to strong results from SPAM luncheon meat and SKIPPY peanut butter,” Snee said.
“Specialty Foods sales declined, primarily due to the divestiture of Diamond Crystal Brands in May, while sales of MUSCLE MILK protein products were strong,” mentioned Snee. “Specialty Foods earnings decreased primarily due to increased advertising. Our International segment had a tough quarter as the team continues to work through challenging market conditions in China.”
“Fiscal 2017 will mark the 51st consecutive year we have increased our dividend, an accomplishment few other companies can claim,” Snee said. “Effective in the new fiscal year the annual dividend will be $0.68 per share, a 17 percent increase.”
Refrigerated Foods segment profit increased 51 percent driven by excellent results in foodservice and retail channels in addition to lower input costs. Sales grew 8 percent on volume growth of 9 percent aided by foodservice products such as HORMEL BACON 1 fully cooked bacon and HORMEL pepperoni, and retail products such as APPLEGATE deli meats, HORMEL NATURAL CHOICE meats, and HORMEL GATHERINGS party trays.
Jennie-O Turkey Store segment profit increased 26 percent and sales increased 29 percent following the recovery from avian influenza in fiscal 2015. Increased earnings reflect improved live production results in addition to strong sales growth from JENNIE-O branded foodservice products.
“In fiscal 2017, we expect to generate organic sales growth consistent with our long-term goal of five percent coupled with mid-single-digits earnings growth,” said Snee. “Grocery Products is positioned to deliver an excellent year aided by the inclusion of JUSTIN’S specialty nut butters and contributions from branded products such as SKIPPY peanut butter and HERDEZ salsas. Jennie-O Turkey Store should benefit from favorable grain prices and increasing demand for JENNIE-O branded products. We anticipate continued low input costs for our value-added products in Refrigerated Foods in addition to positive momentum in both retail and foodservice channels.”
“We expect the International segment to show growth through increased exports and improved results from our China business,” mentioned Snee. “Specialty Foods is expected to show year-over-year sales and earnings growth net of the Diamond Crystal Brands divestiture and will benefit from continued strong results from MUSCLE MILK protein products.”
“Taking all these factors into account and considering the previous three years of strong double-digit earnings increases, we would have expected our fiscal 2017 earnings guidance range to be $1.71 to $1.77 per share,” commented Snee. “However, after excluding earnings from the Farmer John divestiture of approximately 3 cents per share, we are setting our fiscal 2017 earnings guidance range at $1.68 to $1.74 per share,” Snee said.
Source: Hormel Foods Corp.