Hormel Foods today (25 November) issued annual results rounded off by higher fourth-quarter sales and profits but the earnings – and its 2015 earnings per share forecast – hit the US group’s shares.
The company booked an 8.8% rise in net income to US$171.3m for the 13 weeks to 26 October, equating to earnings per share of US$0.63.
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However, Wall Street analysts were expecting earnings per share of $0.64.
Moreover, Hormel’s forecast for its underlying earnings per share for the new financial year also fell short of analyst expectations. The Spam maker estimates earnings per share will reach between $2.45 to $2.55, excluding items. Wall Street had expected a forecast of $2.59 a share.
Hormel’s stock slid in early trading in New York, down 3.92% at $52.01 at 10:42 ET.
Jeff Ettinger, Hormel’s chairman, president and CEO, described the company’s fourth quarter as “a strong finish to the year”.
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By GlobalDataSegment operating profit increased 9.1% to $269m. Net sales were up 9.5% at $2.54bn. Sales from Hormel’s grocery products division – its third-largest by sales – were down 3.4%. Profits from the division also dropped by more than a fifth due to “record-high” meat raw material costs, Hormel said.
“In fiscal 2015 we expect to exceed our stated goals of 5 percent sales growth and 10 percent earnings growth by continuing to provide consumers with innovative, value-added solutions. We anticipate pork commodity prices and pork operating margins to normalise as the year progresses, providing input cost relief for our grocery products team, but leading to challenging comparisons for our refrigerated foods group in 2015,” Ettinger said.
