Strong demand for bacon and peanut butter lifted first quarter earnings at Hormel Foods Corp.
For the quarter ended Jan. 26, the company reported net earnings of $153.3 million, up 18 percent from $129.7 million a year ago. Diluted earnings per share gained 19 percent to 57 cents compared to 48 cents in the year-ago period. Sales for the quarter climbed 6 percent to $2.2 billion.
“We achieved excellent results in the first quarter, posting an earnings per share increase of 19 percent over last year, with sales up 6 percent. Four of our five segments generated growth in sales and operating profits as we continue to deliver quality products with trusted brands to our customers and consumers,” said Jeffrey Ettinger, chairman of the board, president and CEO.
Profit in the Grocery Products Segment advanced 13 percent, while sales were 20 percent higher due to the acquisition of Skippy peanut butter brand products and increases in Hormel bacon toppings, chili and the Herdez product line that is part of the MegaMex Foods joint venture, the company said. Sales of Spam and Hormel Compleats microwave meals were soft in the quarter.
The Refrigerated Foods segment delivered a strong performance with segment profit up 59 percent, the company said. Higher pork operating margins, sustained strong demand for bacon products and growth in Hormel's foodservice business. Sales climbed 6 percent led by retail sales of Black Label bacon items, Hormel REV snack wraps and Lloyds ribs, the company noted. Also factoring into the segment performance were foodservice sales of Hormel Fire Braised meats and Old Smokehouse Pecanwood Smoked Bacon.
The Jennie-O Turkey Store segment profit increased 1 percent on lower feed costs which were offset by lower live production performance due to extreme weather conditions, Hormel said. Sales for the quarter rose 2 percent, led by sales of brand's fresh lean ground turkey tray packs and chubs and turkey bacon. The company made additional investment in the Jennie-O Turkey Store segment, including the launch of a new "Make the switch" media campaign in January featuring lean ground turkey.
“Our recently acquired Skippy peanut butter business was a strong contributor to our Grocery Products segment results this quarter. Our Refrigerated Foods segment benefited from strong demand for our products and positive pork operating margins,” Ettinger said. “While our Jennie-O Turkey Store segment experienced more favorable feed costs this quarter, the savings were offset by weaker live production performance driven by extreme, sustained cold weather. Our International & Other segment registered excellent sales and earnings growth led by export sales of our Spam family of products and Skippy peanut butter products. As anticipated, our Specialty Foods team was unable to post increases this quarter as it rebuilds its product portfolio.”
