In a release dated March 1st Hormel Foods (HRL) reported on the first quarter of fiscal 2022 ending January 30th 2022. For the quarter the company earned $239.6 million on revenue of $3,044 million with an EPS of $0.44. Comparable values for Q1 of fiscal 2021 were net income of $222.2 million on revenue of $2,461million with an EPS of $0.41.
For the most recent quarter the Jennie-O Turkey Store segment generated sales of $384.5 million with an operating profit of $43.7 million. For the first quarter of fiscal 2021, revenue was $333.3 million and operating profit $26.9 million. Volume in the Jennie-O segment was down three percent but sales value was higher by fifteen percent with the Segment contribution up 62 percent. Growth was derived from a return in food service, demand for whole birds and branded products. An increase in feed and logistic costs challenged earnings but were absorbed.
In commenting on results, Jim Snee, Chairman, president and CEO stated, “We continue to take transformative actions at Jennie-O Turkey Store and are starting to see the benefits. We have a plan for the integration of all business functions into the broader Hormel Foods organization, including our supply chain, selling organization and marketing team. Our actions will lead to a more demand-oriented and optimized turkey portfolio that is better aligned with the changing needs of our customers, consumers and operators. This is expected to result in improved long-term growth, higher profitability and lower earnings volatility."
The Company release noted “Beginning in the first quarter, the Jennie-O Turkey Store team implemented a program to optimize our commodity portfolio while simultaneously increasing investments into branded, value-added products. Additionally, the company integrated the Jennie-O Turkey Store and Hormel Foods research and development teams. The company plans to integrate other business functions, such as the selling organization and marketing teams, into the broader Hormel Foods organization by the start of fiscal 2023.
The report added that closure of the Benson Avenue production facility remains on track for the second quarter of fiscal 2022. Further, the company will integrate the Jennie-O Turkey Store supply chain into the broader Hormel Foods One Supply Chain by the start of fiscal 2023.
The company expects the Jennie-O Turkey Store business to deliver higher growth and profitability along with other financial benefits, including increased asset efficiency, higher manufacturing throughput, better labor utilization and avoidance of capital expenditure. The company expects these changes will drive selling, general and administrative cost synergies of approximately $20 to $30 million annually by fiscal 2023.
Hormel Foods has a market capitalization of $26.3 billion and had traded over the past 52 weeks in a range of $40.48 to $50.74 with a 50-day moving average of $48.19. HRL trades with a forward P/E of 29.2 and a beta of 0.1. For the trailing 12-month period, operating margin attained 10.0 percent and profit margin 8.0 percent. The company has generated returns on assets of 6.3 percent and on equity 13.6 percent. HRL closed at $47.63 on February 28th but rose sharply at the open following the release to trade at $49.63 at 13H00 on March 1st.
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