Austin / MN. (hrl) Hormel Foods Corporation, a leading global branded food company, reported results for the fourth quarter of fiscal 2022. The fourth quarter and full year of 2022 reflect one fewer week compared to the prior year. All comparisons are to the fourth quarter of fiscal 2021 unless otherwise noted.
Fiscal 2022 Highlights
- Record net sales of USD 12.5 billion, up 9 percent; organic net sales1 up 6 percent, excluding the partial-year impact of the Planters® snack nuts business and an additional week last year
- Operating income of USD 1.3 billion, up 17 percent; up 13 percent compared to adjusted operating income1 of USD 1.2 billion last year
- Operating margin of 10.5 percent compared to 9.9 percent last year and compared to adjusted operating margin1 of 10.2 percent last year
- Pretax earnings of USD 1.3 billion, up 13 percent; up 9 percent compared to adjusted pretax earnings1 of USD 1.2 billion last year
- Effective tax rate of 21.7 percent compared to 19.3 percent last year
- Diluted earnings per share of USD 1.82, up 10 percent; up 5 percent compared to adjusted diluted earnings per share1 of USD 1.73 last year
- Cash flow from operations of USD 1.1 billion, up 13 percent
Fourth Quarter Highlights
- Net sales of USD 3.3 billion, down 5 percent; organic net sales1 up 2 percent, excluding the impact of an additional week last year
- Operating income of USD 367 million, up 3 percent
- Operating margin of 11.2 percent compared to 10.4 percent last year
- Pretax earnings of USD 357 million, up 1 percent
- Effective tax rate of 21.7 percent compared to 20.0 percent last year
- Diluted earnings per share of USD 0.51, comparable to USD 0.51 last year
- Cash flow from operations of USD 372 million, down 34 percent
Executive Commentary
«We achieved all-time record sales and double-digit profit growth in fiscal 2022,» said Jim Snee, chairman of the board, president and chief executive officer. «In addition to delivering year-over-year growth, our team successfully integrated the Planters® business, made progress on our six strategic priorities, showed tremendous resolve in overcoming a challenging operating environment, and laid the groundwork for the next step in our evolution as a global branded company, the Go Forward (GoFWD) initiative.»
«In the fourth quarter, our team delivered diluted earnings per share comparable with record results last year, which included an additional week of sales,» Snee said. «These results further demonstrate that our brands remain healthy, and the strategic investments we have made are enabling growth. Organic volume and organic net sales growth were led by our center-store grocery portfolio as well as another solid performance from our foodservice businesses. We saw volume and sales2 growth from many retail brands and products in market, including Hormel® Black Label® bacon, SKIPPY® peanut butter products, SPAM® products, Hormel® chili, Hormel Gatherings® party trays and Lloyds® meats. Segment profit growth was due to the Jennie-O Turkey Store segment, as the team effectively managed limited turkey supply and maximized operational performance. We also made progress across our supply chain to increase production capabilities and restore inventories on key product lines.»
Strategic Evolution
The company transitioned to three operating segments – Retail, Foodservice and International – and began operating under the new model on Oct. 31, 2022. As part of the transition, implementation activities in the first quarter are expected to include:
- Adopting a new organizational design, management structures and accountabilities;
- Continuing the work to fully integrate Jennie-O Turkey Store into the company’s One Supply Chain and new operating segments; and
- Standing up the Brand Fuel Center of Excellence, which will house enterprise-wide brand management expertise, e-commerce capabilities, insights-led innovation and analytical support to further enable data-driven decisions.
«The deliberate and thoughtful steps we have taken thus far are all about creating the Hormel Foods of the future,» Snee said. «We are excited for the additional collaboration, capabilities and value we will realize from this transition and are increasingly confident in our ability to drive long-term sustainable growth.»
Changes to the company’s operating segments have no impact on historical consolidated results of operations, financial position or cash flows. The company will provide recast financial information for fiscal years 2021 and 2022 in February 2023. Earnings will be reported under this structure beginning with the release of fiscal 2023 first quarter results in early March.
Fiscal 2023 Guidance
«We enter the new fiscal year well-positioned in the retail, foodservice and international channels, and expect to drive top-line growth,» Snee said. «We believe higher levels of brand investment, increased production capacity and our initial GoFWD actions further support this expectation. We anticipate earnings growth to be driven by our Foodservice and International segments, and improvements across the supply chain.»
«We expect to operate in a volatile, complex and high-cost environment again in fiscal 2023,» Snee said. «We have benefited from our balanced business model, which is not heavily dependent on any one channel, protein, input or product category. Our long-term strategy to meet consumers where they want to eat, with a broad portfolio of trusted brands and products, will continue to be a key differentiator for our business, helping to drive growth for our customers and operators.»
