Food Business News - June 12, 2018 - 16

AUSTIN, MINN. - Hormel Foods' earnings
rose during the second quarter of fiscal
2018, ended April 29. The company benefited from the strength of its Refrigerated
Foods business unit, which features such
staple brands as Spam, Hormel and Natural Choice. But pressures from rising


freight costs, an oversupply of turkey
and a very aggressive competitor in the
sports nutrition category pressured
the company's performance during the
Net income for the quarter rose
to $237,522,000, equal to 45c per

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Converting the REV product
line to an all-natural
formulation led to strong
results during the quarter,
Hormel Foods said.


Turkey, sports nutrition categories
pressure Hormel earnings

share on the common stock, up from
$210,926,000, or 40c per share, in the
same period a year ago.
Sales for the quarter rose to
$2,330,568,000, which compared with
$2,187,309,000 the year prior.
"Total company sales for the quarter
were up 7% on a 3% volume increase,"
said James P. Snee, chairman, president
and chief executive officer, during a
May 24 conference call with analysts to
discuss the results. "The increases were
driven by the recent strategic acquisitions of Ceratti, Columbus Craft Meats
and Fontanini.
"On an organic basis, volume decreased 1% while sales were flat. Many
value-added brands in each segment
grew, but the gains were offset by lower
results from Jennie-O Turkey Store, CytoSport and our contract manufacturing
In Refrigerated Foods, the company's largest business unit, sales rose
13.5% to $1,166,967,000 and operating
profit increased 18% to $154,192,000.
"Our Hormel Natural Choice franchise showed very strong growth this
quarter," Mr. Snee said. "This past quarter, we fully converted our REV product
line to an all-natural formulation and
relaunched the products under the Natural Choice brand. The results to date have
been impressive.
"Food service sales of Hormel
Bacon 1 fully-cooked bacon, Hormel Fire
Braised Meats and Café H products all
generated excellent growth this quarter
as we continue to partner with and deliver innovative solutions to operators who
are facing time and labor challenges."
In Hormel's Grocery Products unit,
which was merged with Specialty Foods
at the beginning of this fiscal year, sales
fell 1.4% to $631,550,000 and operating
profit fell 12% to $95,651,000. Mr. Snee
attributed most of the issues to Hormel's
CytoSport business.
"The CytoSport business is facing
numerous headwinds," Mr. Snee said.
"We are having success in the food,
drug and mass channel, which will
continue to be an area of focus for us
as we work to grow the Muscle Milk
brand. While this business is not where
June 12, 2018


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