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November 22, 2016

Hormel Foods CEO Jim Snee hails “strong finish” to FY in Q4

Hormel Foods, the US group behind brands from Spam to Muscle Milk, today (22 November) announced "record earnings" for the fourth quarter of its financial year.

By Dean Best

Hormel Foods, the US group behind brands from Spam to Muscle Milk, today (22 November) announced “record earnings” for the fourth quarter of its financial year.

Jim Snee, Hormel’s president and CEO, said the company had put in “a strong finish” to its financial year, which ran to 30 October.

In what was a 14-week fourth quarter, Hormel generated net earnings of $243.9m, up from $187.2m a year earlier. EBIT stood at $364.7m, versus $289.2m in the fourth quarter of the previous financial year.

Hormel posted fourth-quarter net sales of $2.63bn, compared to $2.4bn in the fourth quarter of 2014/2015.

“Three of our five business segments delivered sales, volume, and earnings growth, again demonstrating our balanced business model,” Snee noted.

Snee said sales from Hormel’s speciality foods arm fell due to the sale of the company’s Diamond Crystal Brands business in May. An increase in advertising also weighed on the division’s earnings. The Hormel chief said the company’s international arm had “a tough quarter as the team continues to work through challenging market conditions in China”.

For the 53-week year, Hormel posted net sales of $9.52bn, compared to $9.26bn a year earlier. EBIT reached $1.32bn, versus $1.06bn the previous year. Net earnings were $850.1m, against $686.1m.

Yesterday, Hormel announced the sale of a group of meat assets, including the Farmer John brand, to US meat group Smithfield Foods.

Looking to the new financial year, Snee said Hormel expects to post organic sales growth “consistent with our long-term goal of 5%”. He also estimated Hormel would see “mid-single-digits earnings growth”, although that forecast has been affected by the sale of the group of assets to Smithfield.

“We would have expected our fiscal 2017 earnings guidance range to be $1.71 to $1.77 per share. However, after excluding earnings from the Farmer John divestiture of approximately 3 cents per share, we are setting our fiscal 2017 earnings guidance range at $1.68 to $1.74 per share,” Snee said.

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