Profits Jump at Spam and Muscle Milk Maker Hormel Foods
17 Feb 2016 --- Hormel Foods, the maker of Muscle Milk, Spam and Vital Cuisine, has reported that its net income has jumped 37 percent year-on-year in the first quarter, powered by the performance of its refrigerated foods unit.
Net income lifted from $172 million to $235 million, ahead of analysts’ expectations, but sales in the 13 weeks to January 24 dropped year-on-year from $2.4 billion to $2.3 billion.
The best performing division of the company, whose brands also include Farmer John and Skippy, was refrigerated foods, which saw profits up 65 percent and volume sales up five percent.
Profits across its grocery division were up 26 percent but volume sales were down 5 percent.
At its Jennie-O turkey store, operating profit was down two percent while volume sales were down 23 percent.
Operating profits were up 44 percent across its speciality foods unit while volume sales were down four percent.
Jeffrey M Ettinger, chief executive and chairman of Hormel Foods, said: “We are pleased to report a double-digit earnings increase for the quarter, with four of our five segments posting earnings growth. This marks our eleventh consecutive quarter of achieving record earnings results.”
“Our commitment to investing in the sustained growth of the business is evident in our results. Our business performance continues to be influenced by our company-wide spirit of innovation, increased brand support, prudent capital investment, and portfolio-expanding acquisitions.”
The company’s performance in the quarter has prompted it to nudge up its full-year earnings forecast to between $1.50-$1.56 a share, compared to between $1.43-$1.48 highlighted previously.
James P. Snee, president and chief operating officer, said “We expect favorable input costs to continue for Refrigerated Foods, Grocery Products, and Specialty Foods, while we look for pork operating margins to moderate as the year progresses.”
“Our turkey production is on pace to return to normalized levels by the end of the second quarter, positioning Jennie-O Turkey Store for strong growth in the back half of fiscal 2016 with our on-trend portfolio of Jennie-O turkey products.”
“We expect International to achieve improved results with increased sales of our Skippy peanut butter and Spam family of products.”
“As part of our efforts to drive revenue growth, we are currently investing in our brands through impactful new advertising campaigns for innovations such as our Skippy PB Bites, and core items including Hormel pepperoni and Muscle Milk protein products.”
