Hormel Foods Record Q1 results
Grocery Products sales increased 7% on the addition of Justin’s specialty nut butters along with strong sales of Wholly Guacamole dips, Skippy peanut butter products, and Herdez salsa. Segment profit was up 1%. Grocery Products increased advertising to support key brands such as Wholly Guacamole dips and Herdez salsa.
Refrigerated Foods segment profit increased 4% driven by solid value-added product growth in the foodservice and retail channels. Sales declined 3%, primarily related to the divestiture of the Farmer John business in January 2017. Foodservice products such as Hormel pepperoni and Hormel fully cooked bacon, and retail products such as Hormel Gatherings party trays and Hormel Natural Choice meats had excellent sales growth this quarter.
Jennie-O Turkey Store sales increased 13% and volume increased 22% while segment profit decreased 25%. Despite volume and sales increases of value-added products, segment profit declined primarily due to lower turkey commodity prices and increased operating expenses. Pricing pressure from competing proteins in the foodservice, deli and retail channels also affected the quarterly results.
Specialty Foods segment profit was flat and sales declined 19%, primarily due to the divestiture of Diamond Crystal Brands in May 2016. International segment profit increased 5% while sales decreased 2%. Strong fresh pork exports offset declines in branded exports. High pork raw material costs continued to impact the profitability of the company’s China meat business.