Hormel Foods reports disappointing Q3 earnings, adjusts full-year forecast

USA – Hormel Foods, a popular canned meat company has announced disappointing financial results for the third quarter of fiscal year 2024 – the company reported earnings per share (EPS) of US$0.40, falling short of analysts’ expectations. 

Net sales for the quarter decreased by 2.3%, totaling US$2.96 billion, and net income was recorded at US$162.7 million. 

Although the revenue for the quarter was US$2.9 billion, which was a 2.2% decline and missed forecasts, the diluted EPS of US$0.37 aligned with estimates.

Following the announcement, Hormel Foods’ stock experienced a decline of more than 7%, putting it in negative territory for the year. 

The company has revised its full-year revenue outlook, now predicting between US$11.8 billion and US$12.1 billion, a reduction from its previous estimate of US$12.2 billion to US$12.5 billion. 

The forecast for diluted EPS has been adjusted to a range of US$1.57 to US$1.63, slightly updated from the prior range of US$1.55 to US$1.65. 

Current consensus estimates from Visible Alpha are for revenue of US$12.1 billion and EPS of US$1.56.

Sales within Hormel’s retail division fell by 7%, with volumes decreasing by 9%. 

The company attributed this downturn to lower turkey prices, reduced contract manufacturing volumes, and a decline in sales of Planters nut products, among other factors. 

In contrast, the foodservice division saw a 7% increase in sales and a 2% rise in volumes.

However, the international segment reported a 2% drop in sales and a significant 13% fall in volumes.

Hormel has cited rising input costs and decreased demand for commodity products, particularly in its Jennie-O Turkey Store segment, as major contributors to the shortfall.

Despite these challenges, the company remains committed to long-term strategies aimed at innovation and product diversification.

Earlier in the year, Hormel was compelled to conduct a voluntary recall of certain products. 

In May 2024, the company recalled a limited quantity of Planters Honey Roasted Peanuts and Planters Deluxe Lightly Salted Mixed Nuts. 

The affected products, distributed across five states, had been produced in the previous month.