Hormel Foods has cut its forecast for annual underlying earnings after “disappointing” profits in the US manufacturer’s fiscal third quarter.
The Spam maker now sees its full-year operating income coming in at between $982m and $996m, down from its previous forecast of $1.12bn to $1.19bn.
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Hormel, home to brands including Skippy peanut butter, lowered its projection for diluted earnings per share. The company had forecast diluted EPS of $1.49 to $1.59; now, it sees the metric landing at $1.49 to $1.59.
“The third quarter demonstrated the relevance of our portfolio, evidenced by our strong organic volume and net sales performance across each of our segments,” interim CEO Jeff Ettinger said. “Our earnings results, however, were disappointing and we fell short of our expectations. The steep rise in commodity input costs affecting our industry was the largest contributor to our shortfall. This inflation was partially mitigated by our Transform and Modernise initiative.”
Under the programme, set for three years, Hormel is looking to reduce costs and improve production efficiency.
Part of the reason for the cut to the company’s forecast for annual operating income is an increase in spending on the initiative.
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By GlobalDataDuring the third quarter, which ran to 27 July, Hormel said it had been working on 90 projects under the programme. Earlier this month, it emerged the business is set to lay off more than 130 staff at a production facility in the state of Georgia.
Third-quarter net sales grew 4.6% to $3.03bn. Organically, net sales increased 6%. The company saw net sales rise in each of its three divisions of US retail, US foodservice and international, although foodservice volumes fell.
Operating income increased 1.3% to $239.7m. Net earnings rose 4% to $183.7m.
“We are confident in our portfolio’s ability to continue delivering impressive top-line results, despite today’s dynamic consumer environment, and we are committed to translating that performance into improved earnings,” Ettinger said.
Ettinger was named Hormel’s interim CEO in June – and said it will be more than a year until the role is filled permanently.
Jim Snee, Hormel’s former CEO and president, announced his retirement in January after eight years at the helm.
Ettinger stepped down from the position of CEO in 2016 to serve as Hormel’s chairman of the board.
The company also announced John Ghingo will be promoted to the role of president. Ghingo is executive vice president for Hormel’s retail business unit, which houses the company’s consumer brands. He has been in the role since 2024 after four years leading Hormel subsidiary Applegate Farms.
