Hormel Foods: Reports Second Quarter 2023 Results

Austin / MN. (hrl) Hormel Foods Corporation, a leading global branded food company, reported results for the second quarter of fiscal 2023. All comparisons are to Q2 of fiscal 2022 unless otherwise noted.

Executive Summary Second Quarter 2023

  • Net sales of USD 3.0 billion
  • Operating income of USD 296 million
  • Operating margin of 9.9 percent
  • Earnings before income taxes of USD 279 million
  • Effective tax rate of 22.1 percent
  • Diluted net earnings per share of USD 0.40
  • Cash flow from operations of USD 208 million

Executive Commentary

«We had clear priorities heading into the second quarter, and our results demonstrate our team’s ability to execute on those commitments, deliver results in line with our expectations for the quarter, and most importantly, keep us on track to drive growth in the back half of the year,» said Jim Snee, chairman of the board, president and chief executive officer. «We made progress during the quarter to address inventory levels, stabilize the «Planters» snack nuts business and continue the implementation of our GoFWD operating model. Additionally, our fill rates experienced another quarter of meaningful improvement and are now approaching pre-pandemic levels, a credit to our supply chain team and the strategic investments we have made in our business.»

«As expected, strong bottom-line growth from the Foodservice segment during the quarter and the benefit from cost relief in certain areas were offset by lower results from the Retail and International segments,» Snee said. «Again this quarter, we leveraged our long-standing relationships, differentiated product portfolio and direct sales team to drive growth for our Foodservice business. In our Retail segment, we continued to benefit from pricing actions and the strength of our leading brands, helping to offset the impact of unfavorable mix and higher operating costs. While our International segment remained challenged, primarily due to a slower-than-expected recovery in China and less turkey available for export, the team drove excellent growth for the «SKIPPY» and «Planters» brands during the quarter. We also experienced a direct benefit from our multiyear efforts to align resources to our value-added platforms and reduce our exposure to commodity businesses. These actions will continue as part of our evolution as a global branded food company.»


«We expect sales and earnings growth in the back half of the year,» Snee said. «We anticipate continued growth from our Foodservice segment and an inflection in our International segment to be the primary drivers for growth. All of our businesses are expected to benefit from higher turkey volumes and improved fill rates in key categories, such as bacon, pepperoni, snack nuts, and for our «SPAM» family of products. Coupled with the progress we have made on GoFWD – including standing up Brand Fuel, restructuring our sales teams and resourcing our marketing teams to better support our leading brands – we remain confident in our growth outlook as we continue to meet the needs of our customers, consumers and operators in this dynamic environment. We are also focused on a number of projects aimed at reducing costs and complexity to improve our margin structure. We expect to start seeing a return from these projects by the fourth quarter. We are encouraged by the progress we have made and our team’s sense of urgency to address the near-term challenges impacting the business.»

The Company is reaffirming its previously communicated sales and earnings guidance ranges for the full year. For fiscal 2023, the Company expects net sales growth of 1 percent to 3 percent compared to the prior year and full-year diluted net earnings per share to be USD 1.70 to USD 1.82.