Hormel Foods Corp. reported third quarter sales growth Thursday, matching analysts' expectation despite elevated trade tariffs, high freight costs and ongoing effects of a national oversupply of turkey.
Earnings for the company's third quarter, ended July 29, grew 15 percent over last year to 39 cents per share on $2.4 billion in net sales.
Organic net sales, which excludes the acquisition of Columbus Craft Meats and Fontanini Italian Meats and Sausauges, and the divestiture of Farmer John, were flat.
The Austin, Minn.-based food company also revealed it will receive $30 million in cash for the sale of its large Fremont, Neb., plant, a deal it announced last week. Hormel expects it will spend $15-$20 million on the transaction to relocate some of the processing functions to other company-owned facilities and pay down pension commitments.
The Fremont plant slaughters and processes about 10,500 hogs every day, accounting for one-third of Hormel's hog volume. The deal includes a multiyear commitment from the buyer, WholeStone Farms, to supply Hormel with pork.
Hormel, like Golden Valley-based General Mills and other makers of consumer packaged goods, is grappling with higher freight costs caused by a shortage of drivers, reduced capacity and higher fuel costs.
The company sold more Jennie-O turkey products this last quarter than a year ago, but the segment's profit was still down 23 percent. Profits were flat in its refrigerated foods business, which includes brands like Hormel Natural Choice and Applegate, while grocery products, including Wholly Guacamole and Skippy peanut butter, was up 4 percent.
Hormel's international business unit posted a profit jump of 9 percent due to higher export sales of Spam and Skippy. Tariffs tempered the unit's overall results as fresh pork export volume, sales and profitability declined sharply in key markets.
The company reaffirmed its full-year guidance of $1.81 to $1.95 per share, but trimmed its full-year revenue forecast to $9.4-$9.6 billion, down from $9.7-$10.1 billion.
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