Dive Brief:
- Hormel reported earnings of $235.1 million, or 43 cents per share, up 37% year over year, though that profit still missed analysts' estimates. Operating profits from grocery products (26%), refrigerated foods (65%), and specialty foods (44%) contributed to the total increase.
- Revenue and volume both saw declines of 4% to $2.3 billion and 3%, respectively.
- Hormel raised its full-year 2016 earnings guidance to $1.50 to $1.56 a share over its previous guidance of $1.43 to $1.48 a share.
Dive Insight:
Sales for refrigerated foods increased 2% and volume 5%, while the grocery, specialty foods, and Jennie-O segments reported lower sales and volumes than the previous year. Applegate, which Hormel acquired last year, and growth in Hormel and Old Smokehouse products contributed to the increase in refrigerated foods sales for the quarter.
Operating profit continues to be strong for Hormel, but sales were also mixed last quarter. Hormel is struggling with issues similar to its processed foods competitors as more startups and smaller companies continue to disrupt the industry. But with success from acquisitions like Applegate, Hormel may pursue more in the future.
Hormel introduced meat snacks products last year. The fast-growing segment is propelled by consumers seeking protein and convenience.
Though sales, volume, and profit were down for Jennie-O due to continued struggles following last year's bird flu outbreak, Hormel's outlook for the brand is positive. COO James Snee said on a conference call with investors that production is on track to normalize by the second quarter's end.