Vending

Hormel Foods suffers Q2 2023 sales, earnings dip

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June 1, 2023

Hormel Foods Corp. suffered Q2 2023 sales and earnings declines against the prior year period, with retail, foodservice and international segments posting sales dips, according to an earnings report.

Highlights include:

• Net sales fell from $3.1 billion to $2.98 billion in the comparative quarters.
• Net earnings fell from $261.7 million to $217.2 million in the comparative quarters.
• Net earnings on both a basic and diluted basis fell from 48 cents to 40 cents.
• Retail net sales fell 4% in the comparative quarters. Growth from the global flavors vertical was more than offset by lower net sales across the other retail verticals. Brands and products such as Hormel chili, Skippy, Hormel pepperoni, Wholly, Applegate frozen items, Hormel Square Table, Hormel Gatherings, La Victoria, Herdez, Dinty Moore and Mary Kitchen delivered net sales growth compared to the prior year. Additionally, Planters snack nuts and Hormel Black Label bacon grew volume during the quarter, partially overcoming the headwind from lower turkey volumes, the impact of elasticities related to pricing actions and lower contract manufacturing volumes.
• Retail segment profit declined 19% due to the impact of lower net sales, unfavorable mix and higher operating costs, partially offset by the benefit from pricing actions across the portfolio, higher equity in earnings from MegaMex Foods and improved results for the bacon business.
• Foodservice net sales fell 3%. Growth in the sliced meats, pizza toppings and premium breakfast sausage categories was more than offset by the impact of lower turkey volumes and lower net pricing in certain categories, such as bacon, reflecting raw material commodity deflation. Brands such as Cafe H, Hormel Bacon 1, Old Smokehouse and Hormel Fire Braised also delivered volume gains compared to the prior year.
• Foodservice profit increased 7% primarily due to improved mix across the portfolio.
• International net sales fell 3%. Growth from the Skippy and Planters brands, in addition to strong growth in Brazil, was more than offset by lower commodity turkey export sales and lower results in China. Foodservice sales in China improved sequentially throughout the second quarter, helping offset the difficult comparison to retail pantry loading and sales to food-security programs last year.
• International profit declined 50% due to lower sales in China and lower turkey export sales.

Shares traded today at $40.47 against a 52-week range of $37.78-$51.69.

The approximately $3 billion in quarterly revenue missed analyst expectations by $60 million while the GAAP EPS of 40 cents beat expectations by 1 cent, according to Seeking Alpha.

"We had clear priorities heading into the second quarter, and our results demonstrate our team's ability to execute on those commitments, deliver results in line with our expectations for the quarter and, most importantly, keep us on track to drive growth in the back half of the year," Jim Snee, chairman, president and chief executive officer, said in the press release.

For fiscal 2023, the company expects net sales growth of 1% to 3% compared to the prior year and full-year diluted net earnings per share to be $1.70 to $1.82.