Hormel Foods Corp. reported its performance for the fiscal year 2013 third quarter. All comparisons are to the third quarter or first nine months of fiscal 2012.
The company reported fiscal 2013 third quarter net earnings of $113.6 million, up 2 percent from net earnings of $111.2 million a year earlier. For the nine months ended July 28, 2013, 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 ended July 28, 2013 were $1.37, equal to a year ago.
Sales for the quarter were $2.2 billion, up 8 percent from the same period in fiscal 2012. For the nine months ended July 28, 2013, sales totaled $6.4 billion, up 6 percent 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 CEO. “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,” Ettinger remarked.
“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,” commented Ettinger.
SEGMENT OPERATING HIGHLIGHTS – THIRD QUARTER
Grocery Products (17% of Net Sales, 29% of Total Segment Operating Profit): Grocery Products segment profit increased by 32 percent. Net sales, including SKIPPY products, increased over last year’s results by 25 percent. Excluding SKIPPY products, segment sales were flat as compared to last year. Net sales of DINTY MOORE stew, HORMEL MARY KITCHEN hash, and HORMEL bacon toppings increased over last year.
Refrigerated Foods (50% of Net Sales, 24% of Total Segment Operating Profit): Refrigerated Foods segment profit declined 26 percent, as elevated raw material costs squeezed margins in certain retail categories, with bacon impacted the most. Sales increased 2 percent, led by retail sales of HORMEL party trays, HORMEL NATURAL CHOICE deli meats, and HORMEL CURE 81 hams, and foodservice sales of HORMEL FIRE BRAISED meats and HORMEL PECANWOOD bacon.
Jennie-O Turkey Store (17% of Net Sales, 25% of Total Segment Operating Profit):Jennie-O Turkey Store delivered a solid performance this quarter despite high feed costs, with segment operating profit up 17 percent from a year ago. Increased value-added sales and an improved product mix offset higher feed costs and lower commodity meat prices. Net sales for the quarter rose 4 percent, driven by growth in sales of JENNIE-O TURKEY STORE ground turkey chubs and turkey bacon.
Specialty Foods (11% of Net Sales, 13% of Total Segment Operating Profit): Specialty Foods segment profit increased 8 percent and net sales grew 5 percent, led by sales of sweetener, nutritional products, ready to drink beverages, and ingredients. The agreement allowing Diamond Crystal Brands to sell SPLENDA® sweetener into foodservice trade channels was extended one month to July 31, 2013.
International & Other (5% of Net Sales, 9% of Total Segment Operating Profit): The International & Other segment grew segment profit by 34 percent and net sales by 31 percent, driven principally by stronger exports of our SPAM family of products and fresh pork, improved performance by our operations in China, and the addition of the SKIPPY export business.
“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,” said Ettinger. “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,” concluded Ettinger. “We have solid marketing and promotional plans in place to drive sales of our value-added products in the fourth quarter.”
Source: Hormel Foods Corp.