AUSTIN, Minn.--(BUSINESS WIRE)--Hormel Foods Corporation reported record performance for the fiscal year 2016 fourth quarter and full year.
All comparisons are to the fourth quarter or full year of fiscal 2015. The fourth quarter and full year of 2016 contains an extra week as compared to the prior year. All earnings per share measures are adjusted to reflect the two-for-one stock split distributed on February 9, 2016.
SUMMARY
Fourth Quarter
- Record diluted earnings per share of $0.45, up 29 percent from 2015 GAAP EPS of $0.35; diluted EPS up 22 percent from non-GAAP1adjusted diluted EPS2 of $0.37
- Record net earnings of $244 million, up 30 percent from 2015 GAAP net earnings of $187 million; net earnings up 22 percent from non-GAAP1 adjusted net earnings2 of $200 million
- Record dollar sales of $2.6 billion, up 9 percent; volume up 9 percent
- Refrigerated Foods operating profit up 51 percent; volume up 9 percent; dollar sales up 8 percent
- Jennie-O Turkey Store operating profit up 26 percent; volume up 32 percent; dollar sales up 29 percent
- Grocery Products operating profit up 5 percent; volume up 12 percent (sales of JUSTIN’S® products contributed 2 percent to volume growth); dollar sales up 16 percent (sales of JUSTIN’S® products contributed 6 percent to sales growth)
- International & Other operating profit down 16 percent; volume up 11 percent; dollar sales up 2 percent
- Specialty Foods operating profit down 10 percent as compared to 2015 GAAP operating profit; operating profit down 42 percent as compared to 2015 non-GAAP1 adjusted segment operating profit2; volume down 29 percent ; dollar sales down 20 percent
COMMENTARY
“We had a strong finish to fiscal 2016, achieving record earnings for the fourteenth consecutive quarter,” said Jim Snee, president and chief executive officer. “Three of our five business segments delivered sales, volume, and earnings growth, again demonstrating our balanced business model. Refrigerated Foods and Jennie-O Turkey Store both had excellent quarters with growth coming from value-added, branded products and improved market conditions. Grocery Products enjoyed a strong quarter aided by the inclusion of the JUSTIN’S® specialty nut butter business in addition to strong results from SPAM®luncheon meat and SKIPPY® peanut butter,” Snee said.
“Specialty Foods sales declined, primarily due to the divestiture of Diamond Crystal Brands in May, while sales of MUSCLE MILK® protein products were strong,” mentioned Snee. “Specialty Foods earnings decreased primarily due to increased advertising. Our International segment had a tough quarter as the team continues to work through challenging market conditions in China.”
“Fiscal 2017 will mark the 51st consecutive year we have increased our dividend, an accomplishment few other companies can claim,” Snee said. “Effective in the new fiscal year the annual dividend will be $0.68 per share, a 17 percent increase.”
SEGMENT OPERATING HIGHLIGHTS – FOURTH QUARTER
Refrigerated Foods (47% of Net Sales, 44% of Total Segment Operating Profit)
Refrigerated Foods segment profit increased 51 percent driven by excellent results in our foodservice and retail channels in addition to lower input costs. Sales grew 8 percent on volume growth of 9 percent aided by foodservice products such as HORMEL® BACON 1TM fully cooked bacon and HORMEL® pepperoni, and retail products such as APPLEGATE® deli meats,HORMEL® NATURAL CHOICE® meats, and HORMEL GATHERINGS® party trays.
Jennie-O Turkey Store (21% of Net Sales, 24% of Total Segment Operating Profit)
Jennie-O Turkey Store segment profit increased 26 percent and sales increased 29 percent following the recovery from avian influenza in fiscal 2015. Increased earnings reflect improved live production results in addition to strong sales growth from JENNIE-O® branded foodservice products.
Grocery Products (19% of Net Sales, 22% of Total Segment Operating Profit)
Grocery Products sales increased 16 percent on the inclusion of JUSTIN’S® specialty nut butters along with strong sales of SPAM® luncheon meat and SKIPPY® peanut butter. Segment profit increased 5 percent. Grocery Products increased advertising for key products such as SKIPPY® P.B. Bites during the quarter.
International & Other (5% of Net Sales, 5% of Total Segment Operating Profit)
International segment profit decreased 16 percent while sales increased 2 percent. High pork raw material costs and soft retail demand continue to weigh on the China meat business.
Specialty Foods (8% of Net Sales, 5% of Total Segment Operating Profit)
Specialty Foods segment profit decreased 10 percent while sales were down 20 percent, primarily due to the divestiture of Diamond Crystal Brands in May. MUSCLE MILK® branded items posted double-digit sales growth with increases across many product lines including protein powders and ready-to-drink protein beverages. Full report.
