Hormel Foods beat market expectations for second-quarter profit and raised the lower end of its full-year earnings as the Wholly dips maker sees steady demand for higher-priced meat products.
The Spam brand owner expects an annual adjusted earnings per share in the range of $1.55 to $1.65, compared with its prior forecast of $1.51 to $1.65. Analysts on average were expecting a profit of $1.58 per share.
Sales at its food service business grew 6% in the quarter, helped by higher volume sales of its bacon, premium prepared protein and turkey categories.
The company also said it benefited from lower logistics and supply chain costs.
Quarterly Highlights
Hormel Foods posted an adjusted profit of 38 cents per share for the quarter compared with analysts' average estimate of 36 cents per share, according to LSEG data.
Overall, however, net sales fell 3% to $1.06 billion (€1.5 billion) in the second quarter ended 28 April, as its retail business – the biggest unit – declined due to lower volumes and pricing for its whole turkey business.
Commenting on the company's performance, chair and chief executive, Jim Snee, stated, “We delivered a strong first half, with consecutive quarters of better-than-expected earnings, a significant improvement in operating cash flows, continued foodservice strength, recovery in our international business and stable volumes across our business.
“Importantly, we made further progress on our strategic initiatives, and we remain on track to deliver on our commitments to improve our business and drive long-term shareholder returns and growth.”
In the first quarter, the Skippy peanut butter maker topped market expectations for sales and profit and reported a 4% increase in overall volumes.
News by Reuters, additional reporting by ESM.
