US food group Hormel Foods saw its profits slide in its fiscal first quarter on the back of high input costs.
The Spam maker reported its net profit slumped 13.8% to US$129.3m for the 13 weeks to 29 January. Operating profit fell 16.9% to $195.9m.
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In Hormel’s grocery products division, operating profit fell 9.2% in the quarter due to higher raw-material costs. Sales dropped 3% with results partially offset by sales growth of the MegaMex Foods joint venture.
Jennie-O Turkey Store, however, had “an outstanding quarter”, with segment operating profit up 4%, over “a very strong quarter” a year ago. Sales grew 4% led by sales of the unit’s fresh tray pack items and turkey burgers.
Group sales in the three-month period amounted to $2.04bn, a 6.1% increase on the prior-year period, Hormel reported yesterday (23 February).
Hormel said it remain cautious about the year ahead, and is anticipating a “challenging operating environment”.
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By GlobalDataHowever, president and CEO Jeffrey Ettinger said: “Sales in our grocery products segment and meat products group should improve, as we begin to see the effects of our new advertising campaigns supporting our Hormel and Spam brands. Taking all of the relevant factors into account, we are maintaining our full-year earnings guidance range of $1.79 to $1.89 per share.”
