While some processors are struggling to increase earnings and sales, Austin, Minn.-based Hormel Foods Corp. has made breaking earnings and sales records look easy. Last November, it touted record-breaking FY2011 net earnings and sales. Net earnings of $474.2 million increased 16 percent from adjusted net earnings of $409.0 million the previous year. Sales for the year totaled $7.9 billion, up 9 percent from last year.
Hormel’s streak continued in Fiscal 2012. Second-quarter net earnings totaled $127.9 million, up 17 percent from $109.6 million one year earlier. Sales climbed to $2 billion, up 3 percent from the same period in 2011. “We are pleased to report record earnings and sales for the second quarter,” said Jeffrey Ettinger, chairman of the board, president and CEO. “This is a good example of our balanced business model in action, as we were able to increase earnings in four out of five segments. Sales grew 3 percent, again with four of our five segments registering gains.”
Second quarter highlights
Operating profit for Jennie-O Turkey Store soared 50 percent above 2Q 2011, driven by value-added sales. Net sales were up 7 percent, led by retail sales of Jennie-O Turkey Store tray pack and turkey burgers.
Grocery Products operating profit increased 10 percent, due in large part to lower pork and beef input costs. Net sales surpassed 2Q 2011 sales by 1 percent. Strong results by the SPAM product portfolio and MegaMex Foods products offset soft sales of microwave products and Dinty Moore stew.
Profit for Refrigerated Foods dropped 25 percent, primarily due to lower pork operating margins during the quarter. Net sales fell 1 percent, with lower commodity pork sales offsetting strong sales of Hormel Natural Choice deli meats, Hormel party trays, Hormel pepperoni and Di Lusso deli products. Sales also increased for value-added foodservice.
Specialty Foods operating profit increased 9 percent. Pricing actions initiated earlier helped offset higher raw-material costs. Net sales increased 12 percent, primarily due to sales of private-label canned meats, ingredients, bulk and nutritional items.
Consisting primarily of Hormel Foods International, the All Other segment profit increased 52 percent and net sales were up 11 percent, driven by stronger exports of fresh pork and SPAM products.
“Our second-quarter results provide positive momentum heading into the back half of the year,” Ettinger said. “We believe continued weaker pork operating margins will be more than offset by stronger results from our other segments.”
Meanwhile, Q1 2012 earnings totaled $128.4 million, or $0.48 per share, compared to $148.8 million, or $0.55 per share one year earlier. First quarter sales totaled $2 billion compared to $1.9 billion from the same year-earlier period, representing a 6 percent increase.
During a conference call with analysts in May, Ettinger said Hormel Foods experienced weak pork operating margins and soft sales in the center of the store. “Nonetheless, our current performance represents the second-best quarter in our company’s history.”
During concluding remarks on his company’s record-breaking 2Q performance, Ettinger says he expects center-of-the-store sales to slowly improve as the company continues advertising support of its Hormel and SPAM brands. “Taking all of the relevant factors into account, we are maintaining our full-year earnings guidance range of $1.79 to $1.89 per share,” he concluded.
Hormel Foods paid its 335th consecutive quarterly dividend at the annual rate of $.60, effective May 15.
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