US-based Hormel Foods has cut its forecast for annual net sales due to lower commodity prices and “production disruptions” at a facility in Virginia.
The Skippy peanut butter owner expects net sales of between $11.8bn and $12.1bn for its 2024 fiscal year, down from its previous forecast of $12.2bn to $12.5bn.
Hormel Foods said today (4 September) following its third-quarter results that “lower-than-expected commodity markets” weighed on its sales.
Within the company's international business, the volume and net sales growth enjoyed by Spam and Skippy were “more than offset by the difficult comparison in the prior year to higher export volumes of low-margin commodity fresh pork and turkey”, the group said.
Meanwhile, a food safety issue at Hormel Foods’ facility in Suffolk, Virginia, which produces Planters snacks, also squeezed US retail sales volumes in the quarter ended 28 July, falling 9%.
The Austin, Minnesota-based company expects an impact of $0.06 cents per share related to the disruption for its financial 2024. It is also assessing the financial impact of storm damage at its facility in Papillion, Nebraska, it added.
“We delivered solid third-quarter results and another quarter of better-than-expected earnings,” said Jim Snee, chairman of the board, president and CEO.
“Many of our key retail brands are growing, outperforming their categories and, most importantly, resonating with our customers and consumers.”
Hormel also narrowed its adjusted diluted net earnings per share guidance for the full twelve-month period, now estimating a range between $1.57 and $1.63. Previously, it was $1.55 to $1.65.
Snee added: “In the fourth quarter, we expect continued momentum across many of our key retail brands, growth within our foodservice and international businesses, improved service levels for the Planters snack nuts business, and further advancements of our 'transform and modernise' initiative.”
In Hormel Foods’ third quarter, net sales fell 2.2% to $2.9bn, with retail sales seeing a 6.6% drop to $1.77bn. However, the foodservice sector saw sales jump 7.1% to $954m.
Total volumes slid 6.9% to 1.02 billion pounds, with retail and international volumes falling 9.1% and 13.3% respectively.
Operating income for the quarter grew year-on-year from $216.8m to $236.7m while net earnings rose from $162.6m to $176.7m.
In the wake of the cut to Hormel Foods' sales guidance, the company’s share price was down 7.85% at 15:28 BST today.
