Hormel Foods has raised its full-year outlook, after booking bumper first-quarter profit gains on the back of improved margins and earnings growth at its refrigerated food and grocery units.
The US food group today (18 February) announced that first-quarter net earnings rose 37% to US$111.2m, up from $81.4m last year.
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Earnings growth far outstripped revenues – which rose 2% – as reduced commodity costs boosted Hormel’s gross margin. Margins improved to 18.4% of sales from 16.1% last year.
“Four of our five business segments delivered double-digit profit gains during the quarter. We are particularly gratified to see the solid improvement in sales and will continue to focus our efforts in this area,” Jeffrey Ettinger, chairman, president and CEO, emphasised.
Earnings at the group’s refrigerated foods business – Hormel’s largest unit – rose 53% on lower costs, although sales declined 1%. The company’s grocery products segment also posted strong earnings growth, up 37%, Hormel revealed. Meanwhile, profit at the Jennie-O turkey unit increased 14% on a 5% jump in sales and Speciality Foods saw profits rise 28%.
Looking to the coming year, Ettinger said that Hormel’s move to unify advertising efforts and its recent acquisition of Country Crock from Unilever would drive top line growth.
Hormel raised its full-year earnings outlook by five cents to a range of $2.68 to $2.78 a share.
Shares in the Spam maker rose 4.73% to $42.53 a share at 5 pm GMT.
