AUSTIN, MINN. — Management’s focus on climbing the “value ladder” pushed Hormel Foods Corp.’s earnings higher during fiscal 2016 and is expected to carry over into fiscal 2017.
For the quarter ended Oct. 30, Hormel’s net income equaled $890,052,000, equal to $1.68 per share on the common stock, and was an increase compared with the previous year when net income was $686,088,000, equal to $1.30 per share.
Sales for fiscal 2016 were $9,523,224,000 compared with $9,263,863,000 during fiscal 2015.
“In fiscal 2017, we expect to generate organic sales growth consistent with our long-term goal of 5% coupled with mid-single-digits earnings growth,” said Jim Snee, president and chief executive officer. “Grocery Products is positioned to deliver an excellent year aided by the inclusion of Justin’s specialty nut butters and contributions from branded products such as Skippy peanut butter and Herdez salsas. Jennie-O Turkey Store should benefit from favorable grain prices and increasing demand for Jennie-O branded products. We anticipate continued low input costs for our value-added products in Refrigerated Foods in addition to positive momentum in both retail and food service channels.”
The company’s Refrigerated Foods business, which includes products sold under the Hormel, Burke, Austin Blues, Lloyd’s and other brands, was the star of the year with sales rising 6% to $4,647,173,000 and operating income rising 38% to $585,652,000 compared with the previous year.
During a Nov. 22 conference call with analysts Mr. Snee said the the recent sale of Clougherty Packing L.L.C. to Smithfield Foods will impact Refrigerated Foods sales and operating income for fiscal 2016.
“We are expecting decreased sales in Refrigerated Foods, as increased sales of value-added products will be offset by the divestiture of Farmer John (Clougherty), which represents approximately $500 million,” he said. “We see continued growth coming from brands such as Hormel Natural Choice, Hormel Gatherings, Hormel pepperoni and Applegate, in addition to food service sales growth from Hormel Bacon1 fully cooked bacon, Hormel Fire Braised meats and Hormel pizza toppings.”
For the fourth quarter, Hormel’s net income was $243,940,000, or 46c per share, which compared with $187,231,000, or 35c per share, in the same period a year ago.
Sales for the quarter were $2,627,941,000, up from $2,400,858,000.
“For the quarter, three of our five segments reported volume sales and earnings growth demonstrating the strength of our balance business model,” Mr. Snee said. “Refrigerated Foods and Jennie-O Turkey Store posted excellent earnings, both up double-digits. Grocery Products recorded solid gains, while Specialty and International earnings were down for the quarter.”