AUSTIN, MINN. — Strong performances from its Refrigerated Foods and Jennie-O Turkey Store business units drove Hormel Foods Corp. during fiscal 2014, ended Oct. 26. The results overshadowed the struggles the company experienced from some of its center store brands that are a part of the Grocery Products division.
“We enjoyed a strong finish to the year, delivering record fourth-quarter sales and earnings,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “Our Refrigerated Foods and Jennie-O Turkey Store segments were able to capitalize on growth of value-added sales and higher meat commodity markets to lead the way.”
Net income for the year totaled $602,677,000, equal to $2.28 per share on the common stock, up from fiscal 2013 when net income was $526,211,000, or $1.99 per share.
Sales for the year were $9,316,256,000, which compared with $8,751,654,000.
Operating profit for Hormel’s Refrigerated Foods and Jennie-O Turkey Store business units rose 45% and 22%, respectively to $338 million and $272.3 million. The results more than offset the operating profit declines of 8% and 19% the company experienced in its Grocery Products and Specialty Foods divisions.
Mr. Ettinger said the areas where Hormel struggled within the Grocery Product division included canned meat items, such as the Dinty Moore and Hormel Chili lines, as well as its microwavable meal business. But he added that one of the reasons for the business unit’s struggles were high meat costs and related pricing actions the company took.
Pork operating margins were a key component to profitability within the Refrigerated Foods business.
“The Refrigerated Foods team showed impressive leadership by managing through especially volatile market conditions this past year and achieving excellent business results in the face of tight raw material supplies,” Mr. Ettinger said Nov. 25 during a conference call with financial analysts. “Our food service group continues to deliver growth in our Refrigerated Foods segment with innovative solutions for food service operators. These include products such as our Hormel Fire Braised meats and Hormel Bacon 1 fully cooked bacon, along with continued growth of Hormel fully-cooked sausages.”
Looking ahead, Hormel Foods has issued an earnings guidance of $2.45 and $2.55 per share for fiscal 2015.
“In fiscal 2015 we expect to exceed our stated goals of 5% sales growth and 10% earnings growth by continuing to provide consumers with innovative, value-added solutions,” Mr. Ettinger said. “We anticipate pork commodity prices and pork operating margins to normalize as the year progresses, providing input cost relief for our Grocery Products team, but leading to challenging comparisons for our Refrigerated Foods group in 2015.
“Jennie-O Turkey Store is entering the new fiscal year with strong sales momentum and beneficial grain markets, but will likely experience less favorable commodity meat markets. International and Other will continue to deliver growth through expansion of its China business, and Specialty Foods will benefit from the inclusion of the CytoSport franchise, consistent with our acquisition expectations.”The company also announced Nov. 25 plans to close a manufacturing plant in Stockton, Calif. Mr. Ettinger cited the age of the plant and cost of upgrading equipment as the reason for the closure. Production capacity will be moved to other plants.