Hormel’s Sales Climb, But Fiscal 2015 Outlook Short Of Expectations

Turkey, refrigerated food sales help offset some losses as company eclipses $9B in revenue for first time.

A strong period for its turkey and refrigerated foods divisions helped Hormel Foods offset sagging sales from its specialty foods and grocery businesses, the company announced Tuesday.
The Austin-based maker of food and meat products earned $171.3 million, or 63 cents a share, for its fourth quarter that ended Oct. 26. That’s up 9 percent from $157.3 million, or 58 cents a share, from the same period a year ago. Hormel fell short of expectations by analysts polled by Thomson Reuters, which forecasted 64 cents a share for the quarter.
Revenue climbed 9.5 percent to $2.5 billion for the quarter, which met expectations and represented an increase of 9 percent from fiscal 2013. For the year, Hormel hit the $9 billion mark in revenue for the first time, an increase of 6 percent from fiscal 2013.
“We enjoyed a strong finish to the year, delivering record fourth quarter sales and earnings,” Hormel CEO Jeffrey Ettinger said in a statement. “Our refrigerated foods and Jennie-O turkey store segments were able to capitalize on growth of value-added sales and higher meat commodity markets to lead the way.”
The Wall Street Journal reported that Hormel, perhaps best known for producing Spam, was hit earlier this year by high meat prices and deadly swine virus that killed millions of young pigs and beset hog farms in 30 states.

Hormel’s Jennie-O turkey division reported a strong fourth quarter with sales climbing 11 percent behind ground turkey and turkey bacon sales. Its operating profit was up 45 percent from a year ago. Hormel’s refrigerated foods sales increased 9 percent both for the quarter and for the fiscal year. This helped offset a 14 percent dip in profits in Hormel’s specialty foods division, which the company said was caused by charges related to acquisition of Muscle Milk maker CytoSport Holdings Inc. Grocery products were down 3 percent mostly due to meat costs and soft sales.
In a news release, Ettinger said the company expects to exceed its stated goals of 5 percent sales growth and 10 percent earnings growth for fiscal 2015. Hormel also expects pork prices to normalize but said its Jennie-O Turkey Store will likely face unfavorable commodity meat markets. Meanwhile, Hormel’s profit guidance of $2.45 to $2.55 per share fell short of the $2.59 per share forecasted by analysts polled by Bloomberg News.
Shares of Hormel’s stock fell more than 4 percent by mid-Tuesday morning at $51.83, down $2.30. That’s still up more than 15 percent from a year ago.