Hormel Among Likely Hillshire Suitors, Posts Record Sales

The Austin-based company is rumored to be eyeing Hillshire Brands Company, whose brands include Jimmy Dean sausages, Ball Park hot dogs, and Sara Lee.

Thanks to strong performance by its grocery products and international business units, Austin-based Hormel Foods Corporation on Tuesday reported record annual sales and profits and a 14 percent jump in its fourth-quarter earnings.
 
Meanwhile, the company is rumored to be among the possible buyers of Hillshire Brands Company, a Peoria, Illinois-based company whose brands include Jimmy Dean sausages, Ball Park hot dogs, and Sara Lee. Bloomberg recently reported that Hormel and Tyson Foods are the two most likely suitors of Hillshire, a $3.2 billion company that has the largest market share in hot dogs and sausages in the country.
 
For the quarter that ended on October 28, Hormel’s net earnings totaled $132.6 million, or 49 cents per share, up from $117.3 million, or 43 cents per share, during the same quarter a year ago. Sales for the quarter rose 3 percent year-over-year to total $2.2 billion.
 
Despite the jump, the company’s quarterly earnings just missed analyst expectations. Analysts polled by Thomson Reuters expected the company to report earnings of 50 cents per share for the fourth quarter.
 
For the full 2012 fiscal year, the company reported net earnings of $500.1 million, up 5 percent from net earnings of $474.2 million last year. Sales for the year totaled $8.2 billion, up 4 percent from last year.
 
The company also announced Tuesday that it is boosting its annual dividend for the 47th consecutive year, from 60 cents per share to 68 cents per share. The company also said that a quarterly dividend of 17 cents per share will be paid to stockholders on February 15.
 
Four of Hormel’s operating segments reported profit increases during the fourth quarter. Earnings from the company’s grocery products unit rose 22 percent from the same quarter last year. Meanwhile, profits from its unit that consists primarily of its international operations rose 24 percent due to strong export sales to Canada.
 
Profits from the company’s Jennie-O Turkey Store line of products rose 5 percent, and its specialty foods unit posted an 8 percent earnings increase. Meanwhile, the refrigerated foods unit reported a profit decline of 12 percent.
 
Hormel CEO Jeffrey Ettinger said in a statement that in 2012, the company enhanced its advertising efforts for its Hormel and Jennie-O Turkey Store brands, which contributed to strong sales.  It also ran a new advertising campaign celebrating the 75th anniversary of its iconic Spam brand.
 
Following its earnings announcement, shares of the company’s stock were trading at $29.96, down about 1.34 percent, on early Tuesday afternoon.
 
To learn how Hormel and other Minnesota-based food companies are coping with the Midwestern drought, and subsequent rise in corn and soybean prices, read a recent Twin Cities Business report by clicking here.
 
Hormel is among Minnesota’s 15-largest public companies based on annual revenue.