Hormel Foods has announced a 1.9% decrease in net sales for the fourth quarter of fiscal 2024 and a 1.6% decline for the full year. Despite these challenges, the company projects growth in 2025.
Financial Highlights
- Fourth Quarter: Net sales reached $3.138 billion, slightly below analysts’ expectations of $3.142 billion. Operating income increased to $294 million from $270 million in the same quarter last year.
- Full Year: Net sales totaled $11.92 billion, down from $12.1 billion in fiscal 2023. Operating income remained steady at $1.07 billion.
Segment Performance
- Retail Segment: Volume decreased by 6%, and sales declined by 4%. However, segment profit rose by 29%, with brands like Hormel Black Label bacon, Applegate meats, Jennie-O ground turkey, and SPAM showing sales growth.
- Foodservice Segment: Volume increased by 2%, and sales grew by 1%, but segment profit fell by 8%.
- International Segment: Volume dropped by 10%, but sales rose by 1%, and segment profit surged by 184%, driven by strong demand in China and robust exports of SPAM and Skippy peanut butter.
Challenges Faced
The company faced lower whole-bird turkey prices, a production disruption at a Planters facility in Virginia, and reduced center-store and contract manufacturing volumes. CEO Jim Snee noted that cost-cutting and modernization efforts helped mitigate some challenges.
Outlook for 2025
Hormel projects net sales between $11.9 billion and $12.2 billion, with operating income ranging from $1.18 billion to $1.28 billion for fiscal year 2025. CEO Jim Snee emphasized the company’s commitment to growth, stating, “The important thing for our 2025 outlook… is it demonstrates growth on top and bottom line. It’s realistic. It’s achievable.”
The company plans to bolster its value-added turkey business and increase brand support in 2025 to drive growth.
Market Reaction
Following the earnings announcement, Hormel’s stock experienced a slight decline, reflecting investor concerns over the company’s sales performance and future outlook.
Despite recent challenges, Hormel Foods remains optimistic about achieving growth in the upcoming fiscal year through strategic initiatives and a focus on key business segments.
