Hormel Foods Corporation (HRL), a food company, posted earnings per share of 42 cents in the third quarter of fiscal 2013 (ended July 28, 2013), a penny higher than the year-ago quarter. However, earnings missed the Zacks Consensus Estimate of 44 cents by 4.5%.
Sales: Hormel’s net sales for the reported quarter were $2,159.5 million, up 7.5% year over year. Revenues also beat the Zacks Consensus Estimate of $2,127.0 million. The year-over-year increase was mainly led by a hike in all the segments, accompanied by the recently acquired Skippy peanut butter line. Total volume was up 3.0% year over year.
During the reported quarter, revenues from Grocery Products improved 24.6% year over year to $370.3 million, while Jennie-O Turkey Store witnessed a revenue rise of 4.4% to $367.1 million. The Refrigerated Foods segment’s revenues increased 2.2% year over year to $1,068.6 million. Similarly, Specialty Foods revenues grew 4.5% to $240.5 million while revenues from International & Other segment swelled 31.4% to $113.0 million during the reported quarter.
Income/Costs: Hormel’s gross profit for the third quarter of fiscal 2013 was $330.3 million, up 7.6% from $307.1 million in the comparable quarter last year. Operating profit margin in the quarter decreased roughly 19 basis points year over year to 8.4%.
Operating profits for Grocery Products for the reported quarter increased 32.2%, while Jennie-O Turkey Store registered a rise of 16.7% year over year. Operating profits for the Refrigerated Foods segment decreased 26.3% in the quarter. Operating profit for Specialty Foods jumped 7.8% and International & Other segment’s profit surged 34.2% year over year.
Balance Sheet: At the end of the reported quarter, the company recorded cash and cash equivalents of $329.5 million, up from $262.7 million at the end of the preceding quarter. Long-term debt (less current maturities) stood at $250.0 million at the end of the quarter, flat compared with the preceding quarter.
The company paid a quarterly dividend at an annual rate of 68 cents per share on Aug 15, 2013, representing the 340th straight dividend payout by the company.
Outlook: In view of the current quarter results, management expects to achieve its previous earnings guidance in the range of $1.88 to $1.96 per share in fiscal 2013. It is expected that all the segments, except Specialty Foods, will grow in the fourth quarter of fiscal 2013. Jennie-O Turkey Store segment, which experienced difficult times in the year are expected to rebound in the next quarter, boosting the total revenue as well as earnings.
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Hormel currently holds a Zacks Rank #4 (Sell).Read the Full Research Report on HRL
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