Hormel Foods has reported record fiscal 2014 third quarter net earnings of $138.0 million, up 21 percent from net earnings of $113.6 million a year earlier. Diluted earnings per share for the quarter were $0.51, up 21 percent compared to $0.42 last year. Sales for the quarter were $2.3 billion, up 6 percent from the same period in fiscal 2013.
“Our team was able to achieve another quarter of record sales and earnings, with sales up 6% and earnings per share up 21% versus the same quarter a year ago,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “Strong demand for pork and turkey, and increased sales of value-added products in our Refrigerated Foods, Jennie-O Turkey Store and International & Other segments more than offset a challenging quarter for our Grocery Products and Specialty Foods segments,” commented Ettinger. “Our balanced model continues to support consistent revenue and earnings growth.”
Grocery Products operating profit decreased 36 percent and total segment sales decreased 3 percent, as our core canned meat and microwave meal franchises were impacted by unusually high input costs and related pricing actions taken earlier this year. SKIPPY peanut butter, HORMEL bacon toppings and the HERDEZ line of products within our MegaMex Foods joint venture delivered volume growth.
Refrigerated Foods segment profit increased 101 percent, and sales increased 12 percent. Results were driven by strong pork operating margins and growth of retail and foodservice value-added products. BLACK LABEL bacon, HORMEL REV snack wraps, LLOYD’S ribs and HORMEL FIRE BRAISED meats experienced sales growth.
Jennie-O Turkey Store segment profit increased 42 percent this quarter and sales were up 4 percent. Increased sales of value-added products along with strong commodity turkey prices and lower feed costs more than offset lower live production performance and higher fuel expenses as the last winter flocks moved through our system this quarter. JENNIE-O ground turkey and JENNIE-O deli products contributed to sales growth during the quarter.
The Specialty Foods segment posted operating profits 25 percent lower than last year with a 10 percent decrease in sales. As expected, lower segment results were largely due to the July 2013 expiration of the agreement allowing Diamond Crystal Brands to sell certain sugar substitutes into foodservice trade channels.
The International & Other segment reported profits up 12 percent and a sales increase of 18 percent. Results were driven by strong growth in our China pork foodservice sales along with the addition of SKIPPY peanut butter in China. SPAM luncheon meat exports were impacted by high input costs.
“Heading into the fourth quarter we will build on the momentum of SKIPPY peanut butter and HORMEL REV snack wraps with advertising campaigns during the back-to-school season,” commented Ettinger. “We are excited to enhance our portfolio of leading brands with the addition of MUSCLE MILK premium protein products in the high-growth sports nutrition category.”
“We anticipate a strong finish to the year from our Jennie-O Turkey Store segment, aided by beneficial grain markets and growing value-added sales, and from our International & Other and Specialty Foods segments,” remarked Ettinger. “The impact of cost pressures in our Grocery Products segment is likely to continue in the fourth quarter, and pork operating margins are not expected to be as beneficial to Refrigerated Foods. Taking all of these factors into account, we expect to finish fiscal 2014 within our previously stated guidance range of $2.17 to $2.27 per share,” stated Ettinger.
