Hormel Foods Corp (NYSE:HRL), a leading global branded food company, stock rose 0.94% (As on September 2, 11:29:32 AM UTC-4, Source: Google Finance) after the company posted mixed result for the third quarter of FY 22. Net sales for Refrigerated Foods increased 2% Y/Y, Grocery Products rose 25%, Jennie-O Turkey Store fell 8%, and International & other sales declined 5%. The gross margin expanded 190 basis points Y/Y to 16.7%. The operating margin was 9.6%, and operating income for the quarter rose 40% to $291 million. The company held $869 million in cash and equivalents as of July 31, 2022. Cash provided by operating activities for the quarter totaled $186 million. The company drove volume, sales and share gains at retail for brands such as SKIPPY, Hormel Gatherings, Hormel chili, Dinty Moore and Mary Kitchen. Likewise, demand for the foodservice products was strong, as operators again turned to the items to help mitigate labor pressures and diversify menu offerings. Value-added products such as the premium bacon and sausage, sliced meats and the line of premium prepared proteins performed exceptionally well this quarter.
Moreover, the Jennie-O Turkey Store segment significantly outperformed the profit expectations for the quarter as the team managed limited turkey supply effectively and maximized operational performance. Refrigerated Foods delivered double-digit, value-added earnings growth on retail and foodservice items, more than offsetting lower commodity profitability. Earnings growth was also supported by the Planters snack nuts business.
HRL in the third quarter of FY 22 has reported the adjusted earnings per share of 40 cents, missing the analysts’ estimates for the adjusted earnings per share of 41 cents. The company had reported the adjusted revenue growth of 6 percent to $3.03 billion in the third quarter of FY 22, beating the analysts’ estimates for revenue of $2.98 billion.
Hormel raised its FY22 sales outlook to $12.2 billion – $12.8 billion from $11.7 billion – $12.5 billion versus the consensus of $12.45 billion. The company lowered FY22 EPS guidance to $1.78 – $1.85 from $1.87 – $1.97 versus the Street view of $1.88.
Meanwhile, the company has recently announced the next step in the strategic evolution, our Go Forward (GoFWD) initiative. The new operating model is a culmination of the recent strategic actions, which included numerous portfolio-building acquisitions, such as the Planters snack nuts business, the creation of One Supply Chain, the modernization of the technology and e-commerce capabilities, and the transformational efforts at Jennie-O Turkey Store.