|Profit in the Jennie-O Turkey Store segment surged 45 percent for the quarter.|
AUSTIN, Minn. – Hormel Foods Corp. reported a 9 percent bump in earnings for the fourth quarter. Strong sales in its Jennie-O Turkey Store and refrigerated foods segments offset weak performances in its grocery products and specialty foods units.
For the quarter ended Oct. 26, the company reported earnings of $171.3 million, or 63 cents per share, up from $157.3 million, or 58 cents per share, in the year-ago quarter. Sales for the quarter advanced 9 percent to $2.5 billion.
“We enjoyed a strong finish to the year, delivering record fourth quarter sales and earnings,” said Jeffrey Ettinger, chairman of the board, president and CEO. “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.
“We hit the nine billion dollar mark in annual sales for the first time in our Company’s history, fueled by our branded, value-added product portfolios. We closed the year with record earnings per share of $2.23, a penny above the midpoint of our full year earnings guidance issued last November,” he added. “Our Refrigerated Foods, Jennie-O Turkey Store, and International segments each delivered double-digit segment operating profit growth this year. High meat input costs and related pricing hampered growth of certain Grocery Products brands in the back half of the year. We have also substantially completed the integration of the MUSCLE MILK brand in our Specialty Foods segment.”
Profit in the Jennie-O Turkey Store segment surged 45 percent for the quarter. Hormel attributed the results to continued sales growth of value-added products and favorable prices for turkey. Sales of Jennie-O brand lean ground turkey and turkey bacon lifted sales by 11 percent, the company reported.
Strong pork operating margins and growth of foodservice value-added products lifted profits in the refrigerated foods segment 10 percent. Sales for the quarter gained 9 percent on higher sales of Hormel Black Label bacon, Hormel side dishes and party trays, foodservice sales of Hormel Fire Braised meats and fully cooked sausage.
Specialty foods and grocery products segments did not fare as well in the fourth quarter. Grocery products segment profits declined 21 percent, while sales slipped 3 percent on record high prices for meat and soft sales. Operating profits in the specialty foods segment dropped 14 percent on charges related to Hormel's acquisition of CytoSport. Segment sales jumped 31 percent on Muscle Milk protein beverage sales, the company reported.
International and other segments climbed 3 percent on 13 percent sales growth. Hormel attributed the results to continued growth of the company's China businesses and increased pork exports.
Looking ahead, Hormel expects to exceed stated goals of 5 percent sales growth and 10 percent earnings growth in fiscal 2015, Ettinger said.
“We anticipate pork commodity prices and pork operating margins to normalize as the year progresses, providing input cost relief for our Grocery Products team, but leading to challenging comparisons for our Refrigerated Foods group in 2015,” he said. “Jennie-O Turkey Store is entering the new fiscal year with strong sales momentum and beneficial grain markets, but will likely experience less favorable commodity meat markets. International & Other will continue to deliver growth through expansion of its China business, and Specialty Foods will benefit from the inclusion of the CytoSport franchise, consistent with our acquisition expectations.”
Ettinger said the company's 2015 non-GAAP earnings per share guidance range is $2.45 to $2.55 per share.