AUSTIN, MINN. – Hormel Foods Corp. takes steps to further streamline its operations; continue to move away from the price volatility often seen in staple meat markets and focus on manufacturing value-added branded offerings.
“Over the past decade, Hormel Foods has deliberately evolved from a meat-centric, commodity-focused, heavily retail, pork and turkey-focused business to a branded global food company. with leading brands across many channels, ”said James P. Snee. , Chairman of the Board, President and Chief Executive Officer, during a conference call on December 9 to discuss the financial results for fiscal 2021. “Our company today is more food-oriented than ever by focusing on ‘focus on the needs of our customers, consumers and operators. “
The company plans to continue its evolution in fiscal 2022 by moving its Jennie-O Turkey Store product portfolio from basics to value-added branded products.
“This is similar to the successful strategy we have executed in chilled foods over the past 15 years,” said Mr. Snee. Hormel’s chilled food business unit includes brands such as Hormel, Black Label, Applegate, Columbus and others.
During the first half of 2022, Hormel Foods plans to close its Benson Ave turkey processing plant. in Wilmar, Minn.
“This factory is an older, inefficient facility that produces a lot of basic items,” Snee said. “The value-added products will be bundled in several other facilities. “
Mr Snee said the company will update its plans for the Jennie-O business unit in early 2022. He added that Hormel Foods has also entered into a five-year deal with Wholestone Farms pork processor, Freemont, Neb., To supply the company with fresh pork products. The contract will be worth approximately $ 350 million in basic pork per year.
“This new agreement more closely matches our pork supply with the needs of our value-added businesses while simultaneously reducing the amount of core pork we sell,” he said. “Similar to the rationale for the sale of the Fremont plant in 2018, this new agreement further diversifies us from commodity sales, increases our flexibility within our supply chain and decreases the volatility of our earnings.”
While the changes are aimed at minimizing future volatility, there were few results for Hormel’s 2021 fiscal year. Net income for the fiscal year ended Oct. 31 jumped to $ 909 million, or $ 1.66 per share on common shares, up from earnings of $ 37 million for fiscal 2020, or 6 ¢ per share.
Annual sales increased 18.5% to $ 11.4 billion.
“Our top line growth has been incredibly balanced as each of our sales channels and go-to-market segments recorded strong double-digit sales gains, supported by value-added volume growth,” prices and a better mix, ”said Snee. .
From a results perspective, three of Hormel’s four business units recorded a profit during the year. Jennie-O Turkey Store was the exception due to high food costs throughout the year, according to the company.
Looking ahead to fiscal 2022, Snee offered an optimistic outlook.
“We expect net sales to be between $ 11.7 billion and $ 12.5 billion and diluted earnings per share to be between $ 1.87 and $ 2.03 per share,” a- he declared. “We expect growth to exceed our long-term goals due to organic growth in each of our segments and the strength of our Planters business. “
In the fourth quarter of fiscal 2021, Hormel Foods earned $ 282 million, or 52 per share on common stock, and an improvement over the fourth quarter of fiscal 2020, when the company earned $ 234 million. of dollars, or 43 per share.
Sales reached $ 3.5 billion in the quarter, up from $ 2.4 billion the year before.
It should be noted during the quarter sales of the catering channels, according to the company.
“Our catering teams across the organization posted sales growth of 72% for the quarter, 33% above pre-pandemic levels,” said Mr. Snee. “This follows growth of 28% in the second quarter and 45% in the third quarter.
“The force was broad with significant contributions from Refrigerated Foods, Jennie-O Turkey Store and MegaMex. We also saw a strong recovery in our non-business segments, particularly colleges and universities and K-12 institutions. “
Mr Snee added that during the fourth quarter, the company began to see relief in commodity prices compared to previous quarters.
“However, rates of labor, freight, supplies and raw material costs remain above year-ago levels and, in the case of freight, have increased further,” he said. -he declares.