Hormel Foods, the US food group, has posted a 4% drop in full-year net earnings, which dipped to US$285.5m, after fourth-quarter earnings plunged 33% to $67.8m.
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Full-year sales totalled $6.75bn during the 12 months to 26 October, up 9% from $6.19bn the previous year, on higher pricing and a 5% increase in volumes. Sales rose 12% to $1.86bn during the fourth quarter.
The company’s refrigerated foods unit booked bumper full-year profits, gaining 22% year-on-year. Hormel’s grocery products business and speciality foods unit also saw full-year operating profit gains, up 5% and 14% respectively. However, profits at the Jennie-O Turkey Store sank 27% in the fiscal year, despite a 6% rise in volumes, due to the high cost of raw materials.
“For the full year, we generated strong volume and sales increases across each of our segments. In addition, four of our five segments had earnings up from a year ago, and total segment operating profits were up 6% from a year ago. We continue to grow our sales of new value-added products and remain on track to meet our goal of $2 billion of new product sales by 2012,” president, chairman and CEO Jeffrey Ettinger said.
Included in the full-year result is a $29m investment loss in the company’s rabbi trust, which was weighted towards the fourth quarter when the company booked a loss of $20.4m.
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By GlobalDataHormel said that its grocery division also had an “off” fourth-quarter, with operating profit dipping 3% in the three months ended 26 October. The company said that this slow-down was the result of greater than expected cost pressures and unfavourable product mix changes.
“The lower [divisional] results were driven primarily by higher beef and pork trim costs, but also as a result of a slowdown of our Hormel Completes microwave meal business,” Ettinger said.
Likewise, the declining profitability of Jenny-O accelerated in the fourth-quarter, when operating profit fell 44% as food and feed costs increased $40m.
