Hormel announces big jump in earnings
Sales volumes dropped by 1%, while net earnings stood at $140.1m - up 12% on the same period last year.
Its Refrigerated Foods division, which accounts for 50% of Hormel’s net sales, posted a 38% rise in operating profit, against a flat volume increase, due to higher pork operating margins.
Retail sales of its Black Label bacon helped push up sales by 10%, while its foodservice brands Hormel Fire Braised meats, and Old Smokehouse Pecanwood Smoked Bacon, and Natural Choice deli meats also saw sales increase.
Its Jennie-O Turkey Store division saw operating profits up 2%, and volumes down 5%. According to Hormel, strong commodity turkey prices and lower feed costs, were offset by lower live production performance and higher fuel expenses from the extended harsh winter. "Sales were down 1% with lower bird weights driving lower volumes," according to a statement by the firm.
Its Grocery Products division posted a operating profit increase of 16%, with its Hormel bacon toppings delivering sales growth, while its International & Other division saw achieved a 34% increased in operating profit, and a 26% increase in volumes.
Jeffrey M Ettinger, chairman of the board, president and chief executive officer, said: "We improved operating profit margins on a total company basis and in four of our five segments. Beneficial pork operating margins and growth in our value-added foodservice business drove our Refrigerated Foods segment results. Favourable turkey commodity markets and growth in value-added product sales helped to mitigate lower live production results in our Jennie-O Turkey Store segment."
Ettinger said the firm continued to generate growth through new innovative value-added products such as its Hormel Bacon 1 - fully cooked bacon which was launched in foodservice channels in the second quarter. However he added that increased pork, beef and turkey costs, driven by tighter raw material supplies, were compressing margins on many of its value-added lines.
