Hormel Foods Corporation says its leading brands, balanced business model and strong balance sheet are positioned to manage through the near-term uncertainty related to African swine fever in China. This week the leading global branded food company reported results for the second quarter of fiscal 2019.
“We achieved record sales this quarter as three of our four segments delivered volume and sales growth,” says Jim Snee, chairman of the board, president and chief executive officer at Hormel Foods. “Many of our innovative product lines such as Hormel Bacon 1 cooked bacon, Hormel Fire Braised products, Hormel Natural Choice snacks and Herdez salsa delivered double-digit sales growth. We also grew core product lines such as Hormel pepperoni, Dinty Moore stew and Austin Blues authentic barbeque products.
“In spite of record sales, second quarter earnings did not meet our expectations. African swine fever in China started to impact global hog and pork markets this quarter, which led to rapidly increasing input costs. In response, we have announced pricing action across our branded value-added portfolio in the Grocery Products, Refrigerated Foods and International segments.”
Key numbers presented in the Hormel Foods’ executive summary include:
- Volume of 1.2 billion pounds, up 1%
- Record net sales of $2.3 billion, up 1%
- Pretax earnings of $318 million, up 7%
- Diluted earnings per share of $0.52
- Excluding one-time gain on the divestiture of CytoSport, adjusted diluted EPS1 of $0.46 per share
- Effective tax rate of 11.1% compared to 20.0% last year
- Operating margin of 13.3% compared to 12.9% last year
- Year-to-date cash flow from operations of $366 million, down 18% due to higher working capital
- Fiscal 2019 earnings guidance decreased to $1.71 to $1.85 per share from $1.77 to $1.91 per share
“Over the past three years, the intentional actions we have taken as part of Our Path Forward, which include evolving to a broader global branded food company, accelerating our foodservice business, modernizing our supply chain and divesting nonstrategic assets, has made our company stronger,” Snee says. “Our experienced management team, leading brands, focus on innovation, strong balance sheet and diversified businesses allow us to manage through times of uncertainty and volatility, as we are currently experiencing with African swine fever.”