Hormel Foods Reports Mixed Fiscal 4Q15 Results: Must-Knows

(Continued from Prior Part)

Hormel Foods Corporation (HRL) reported dollar sales of $2.4 billion, a decrease of 5.6% compared to $2.54 billion in fiscal 4Q14. For the fiscal year 2015 ending October 25, sales totalled $9.3 billion, a decrease of 1% compared to fiscal 2014. Sales fell 10%, excluding the incremental effect of Applegate and MegaMex products that weren’t included in fiscal 2014 sales. Volume for fiscal 4Q15 was also down 2% at 1.3 billion pounds compared to fiscal 4Q14. Fiscal 2015 volume rose 2% to 5.1 billion pounds. Revenue missed average analyst estimates of $2.5 billion for the quarter.

The various factors that affected revenue for 4Q15 and fiscal 2015 included the shortage of turkey in the Jennie-O Turkey Store segment and lower pork prices, which affected sales of the Refrigerated Foods and International segments. Another sales driver was the dissolution of the Precept Foods joint venture.

In the Grocery Products segment, sales rose 4.3% compared to fiscal 4Q14 because of the additional net sales of MegaMex Foods products that weren’t included in fiscal 2014. Refrigerated Foods dollar sales fell 5.1% on 2% higher volume. This change reflected lower pricing compared to fiscal 2014’s strong pork market and the closure of the Precept Foods joint venture. Retail sales of Hormel refrigerated entrees, Hormel Gatherings Party trays, and foodservice sales of Hormel Fire Braised meats, Hormel pepperoni, and Hormel pizza toppings contributed to the sales growth of value-added items.

The Jennie-O Turkey Store segment’s sales fell 17.6%. This was mainly because previously lost flocks caused substantial volume deficits in plant operations and sales that were a disadvantage of the avian influenza outbreak earlier this year. Revenue fell 2.8% for the Specialty Foods segment. This was mainly caused by the addition of Muscle Milk protein beverage sales that didn’t adequately balance lower sales of sports nutrition contract packaging.

Hormel’s competitors Campbell Soup (CPB), Bunge (BG), and Flowers Foods (FLO) recorded net margins of 4.0%, 2.2%, and 5.0%, respectively, in their last reported quarters. The iShares Morningstar Mid Core ETF (JKG) invests 0.61% of its portfolio in HRL. The iShares Morningstar Mid-Cap Value ETF (JKI) invests 0.64% of its portfolio in CPB.

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Browse this series on Market Realist:

• Part 1 - Hormel Foods: Positive Stock Reaction to Fiscal 4Q15 Earnings
• Part 2 - Hormel Foods’ Earnings Beat Consensus Estimates in Fiscal 4Q15
• Part 4 - Hormel Foods’ Fiscal 4Q15: Why Did Margins Improve?