Hormel profits and sales up slightly for 1Q; Jennie-O profits plungePublished 10:02am Thursday, February 21, 2013
Hormel reported a slight increase in profit and total sales for the first quarter, but higher grain costs caused a 23 percent drop in profits for Jennie-O.
Hormel Foods Corp. reported Thursday morning $2.1 billion in sales for the quarter ended Jan. 27, up 4 percent from 2012, but profits only increased 1 percent, from $128.4 million in 2012 to $129.7 million in 2013, and profits were down from the 2011 figure of $148.8 million. The Jennie-O Turkey Store reported a 3 percent increase in sales for the quarter, but Hormel said higher grain costs cut into profits, even as it increased prices in stores.
The figures were in line with expectations, as the company reported earnings per share of 48 cents, which was even with last year.
In the first quarter of 2012, the meatpacker reported a 14 percent drop in profits from 2011 and a 6 percent increase in total sales, but finished the year with a profit of $500.1 million and $8.23 billion in total sales, both records.
Jennie-O, which accounts for 18 percent of net sales, was the only of Hormel’s five divisions to report a drop in profit, although refrigerated foods profits were even with last year.
“Although our team at Jennie-O Turkey Store was confronted with higher grain costs and lower commodity turkey meat prices, we are encouraged by the continued growth in sales,” said Hormel CEO and President Jeff Ettinger in a written statement.
Refrigerated foods, which accounts for exactly half of the company’s net sales, reported a 2 percent decline in sales and was even in profits. Improved results with Hormel pepperoni and Natural Choice deli meats, and by the Affiliated Business Units didn’t fully offset weaker pork operating margins and increased costs in live production operations, the company said.
In the grocery products division, which accounts for 16 percent of net sales, profits increased 13 percent, and sales were up 24 percent. The Don Miguel brand of Mexican food led the division, as sales were only up 4 percent excluding the brand. The company also credited Spam and Hormel Chili.
“Our grocery products segment turned in a fine quarter,” Ettinger wrote.
Specialty foods, which accounts for 11 percent of net sales, saw profits increase by 43 percent on a sales gain of 7 percent. In Hormel’s international division, just 5 percent of total sales, profits increased by 37 percent on sales growth of 4 percent.
“We are pleased with the growth being demonstrated by our grocery products, specialty foods and [international] segments, and anticipate continued success going forward,” Ettinger wrote.
The company is raising its full-year guidance to $1.93 to $2.03 per share from $1.90 to $2.00 per share, Ettinger said, citing in part its expectations for Skippy peanut butter. The company announced in January it purchased Skippy for $700 million, and closed the sale at the start of the second quarter of 2013.
Its shares rose 42 cents, or 1.2 percent, to $36.54 in morning trading after rising as high as $37.05 earlier in the session. FactSet said that is an all-time high for Hormel shares.