Hormel Foods Corporation today reported its performance for the fiscal year 2013 fourth quarter and full year.
All comparisons are to the fourth quarter or full year of fiscal 2012.
The company reported fiscal 2013 fourth quarter net earnings of $157.3 million, up 19 percent from net earnings of $132.6 million a year earlier. Diluted earnings per share for the quarter were $0.58, up 18 percent compared to $0.49 last year. Sales for the quarter were $2.3 billion, up 7 percent from the same period in fiscal 2012.
For the year ended October 27, 2013, net earnings were $526.2 million, up 5 percent from net earnings of $500.1 million last year. Diluted net earnings per share were $1.95, up 5 percent from diluted net earnings per share of $1.86 last year. Sales for the year ended October 27, 2013, totaled $8.8 billion, up 6 percent from last year.
COMMENTARY
"We achieved excellent results in the fourth quarter with earnings per share growth of 18 percent and sales up 7 percent. We delivered both segment profit and sales increases in four of our five segments. We are pleased with our team's ability to drive earnings growth through our on-going efforts to improve operational efficiencies and focus on expanding our value-added franchises, providing strong momentum heading into fiscal 2014," said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer.
"In looking at the full year, we enjoyed sales growth of 6 percent, ending the year at a record $8.8 billion. We grew earnings per share by 5 percent, finishing at record earnings of $1.95 per share, at the upper end of our adjusted guidance range. We broadened our portfolio with the addition of the iconic SKIPPY? brand, providing our team another excellent platform for innovation across many categories. We continued to execute our value-added growth strategy this year with successful new product launches, including our new HORMEL? REV? snack wraps in the retail space and HORMEL? FIRE BRAISEDTM meats in the foodservice channel," commented Ettinger.
"This morning we announced a $0.12 per share increase to the annual dividend, or 18 percent, making the annual dividend $0.80 per share in 2014. This marks the 48th consecutive year in which we have increased our dividend, consistent with our objective to deliver superior total returns to our shareholders," stated Ettinger.
SEGMENT OPERATING HIGHLIGHTS - FOURTH QUARTER
Grocery Products (18% of Net Sales, 26% of Total Segment Operating Profit)
Grocery Products segment profit increased 17 percent. Sales for the quarter were up 23 percent, with the addition of SKIPPY? product sales driving a large portion of the segment sales increase this quarter. HORMEL? COMPLEATS? microwave meals, HORMEL? bacon toppings, and the HERDEZ? line of products within our MegaMex Foods joint venture contributed to the year over year sales increase as well.
Refrigerated Foods (48% of Net Sales, 32% of Total Segment Operating Profit)
Refrigerated Foods segment profit increased 30 percent through enhanced margins in our retail bacon business along with improved pork operating margins as compared to last year's challenging pork operating environment. Sales for the quarter were up 4 percent, led by growth in value-added products including retail sales of HORMEL? pepperoni, HORMEL? NATURAL CHOICE? lunchmeats and LLOYDS? ribs along with foodservice sales of HORMEL? FIRE BRAISEDTM meats and HORMEL? NATURAL CHOICE? deli meats.
Jennie-O Turkey Store (20% of Net Sales, 27% of Total Segment Operating Profit)
Jennie-O Turkey Store delivered excellent results this quarter, with segment profit up 25 percent, driven by the continued sales growth of value-added products and realization of operational efficiencies throughout the supply chain. Sales for the quarter increased 7 percent, led by sales of JENNIE-O TURKEY STORE? fresh turkey chubs, turkey breakfast sausage, and turkey bacon.
Specialty Foods (9% of Net Sales, 6% of Total Segment Operating Profit)
The Specialty Foods segment posted operating profits 34 percent lower than last year with a 14 percent decrease in sales. Lower segment results were due to the expiration of the agreement allowing Diamond Crystal Brands to sell certain sugar substitutes into foodservice trade channels.
International & Other (5% of Net Sales, 9% of Total Segment Operating Profit)
The International & Other segment posted impressive segment profits 82 percent ahead of last year, while sales grew 38 percent. Results were driven by robust export sales of our SPAM? and SKIPPY? product lines.
OUTLOOK
"We expect to deliver continued sales and earnings growth in fiscal 2014. In particular, we are looking for our Refrigerated Foods, Grocery Products, Jennie-O Turkey Store and International & Other segments to drive profit growth in fiscal 2014 as our Specialty Foods segment refocuses following the expiration of a contract representing a significant portion of our sugar substitute business. We expect to benefit from lower grain and turkey commodity costs, while high beef input costs and uncertainty of hog supplies may offset some of those gains headed into the new year," remarked Ettinger. "Taking all of the relevant factors into account, we are setting our 2014 earnings guidance range at $2.17 to $2.27 per share."
DIVIDENDS
Effective November 15, 2013, the company paid its 341st consecutive quarterly dividend, at the annual rate of $0.68.