Jennie-O, Refrigerated Foods help drive Hormel profit
November 23, 2010
by Meat&Poultry Staff
AUSTIN, Minn. – Segment profit gains in Hormel Foods’ Jennie-O Turkey Store and Refrigerated Foods segments helped propel the company’s overall financial performance for the year. For the 12 months ending Oct. 31, net earnings on a US GAAP basis were $395.6 million, or $2.92 per diluted share, up from $2.53 a year earlier. On an adjusted basis, net earnings were $409.0 million or $3.02 per diluted share. Sales totaled $7.2 billion, up 11% from last year’s $6.5 billion. This marks the first time Hormel has hit $7 billion in annual sales.
For the fourth quarter, net earnings were $122,608,000 compared to $104,606,000 from the same year-earlier period. Sales of $2.1 billion, increased 23% from 2009
“We are pleased to report a strong finish this year, with both earnings and sales up double-digits this quarter,” said Jeffrey Ettinger, chairman of the board, president and CEO. “Earnings growth was driven by segment profit gains in our Jennie-O Turkey Store and Refrigerated Foods segments. Our Jennie-O Turkey Store segment led the way with robust earnings attributable to improved efficiencies across all areas of our business, aided by strong commodity turkey meat prices and lower grain costs.
“Our Refrigerated Foods segment also posted strong earnings, benefiting from higher pork operating margins,” he added. “Our Grocery Products segment had a difficult quarter, hampered by higher raw material input costs in comparison to very low input costs a year ago.
“We hit the $7 billion dollar mark in annual sales for the first time in our company’s history, fueled by sales growth across all five of our segments,” he continued. Hormel also announced an $.18 per share increase to its annual dividend rate (or 21.4%), making the new dividend $1.02 per share. This is the 45th consecutive year in which the company has increased its dividend.
Hormel’s Grocery Products segment profit declined 6% for the quarter due primarily to higher raw material costs. Sales increased 24% driven primarily by increased sales of Hormel chili and hash, Compleats microwave meals, and strong sales growth across much of the MegaMex Foods product portfolio. The SPAM product portfolio also showed solid sales growth in the quarter.
Refrigerated Foods’ operating profit for the quarter was up 22%, aided by strong pork operating margins. Sales increased 26%, led by sales of Hormel party trays and pepperoni, and Natural Choice deli meats in the Meat Products group, and by sales of Café H ethnic meats, Natural Choice deli meats and Austin Blues barbecue meats in the Foodservice group.
Jennie-O Turkey Store’s operating profit for the quarter was up 90%, driven by efficiency gains throughout the entire supply chain and in its operations. Earnings were also aided by higher commodity turkey meat prices and an incremental gain of $7.3 million, attributable to open grain positions in their hedging program that affected earnings during the quarter. Sales grew 19%, led by sales gains in each of the value-added businesses.
Segment profit for the All Other segment, which consists primarily of Hormel Foods International, declined 3%, hindered by higher input costs associated with export sales. Sales grew 33%, driven primarily by higher export sales of the SPAM family of products.
“We are setting our fiscal 2011 guidance range at $3.10 to $3.20 per share,” Ettinger said.