Hormel has record Q2 despite avian influenza woes

While the avian influenza outbreak in the United States posed financial challenges for Hormel Foods in the second quarter of fiscal year 2015, the company still had a record-setting second quarter with net earnings of $180.2 million. Those earnings were a 29 percent improvement over the $140.1 million net earnings Hormel Foods achieved during the same period in fiscal year 2014.
Despite having some of its turkey flocks hit by avian influenza, Hormel Foods subsidiary Jennie-O Turkey Store saw its operating profit rise by 41 percent, its volume rise by 14 percent and its dollar sales rise by 15 percent.
Hormel admitted that avian influenza cases began to impact Jennie-O operations toward the end of the quarter, the segment’s financial success was driven by the continued growth of value-added products and lower fuel and grain costs.
 “Jennie-O Turkey Store entered the quarter with excellent momentum and drove robust sales and earnings gains, but exited the quarter with substantial supply chain challenges brought on by avian influenza,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer of Hormel Foods.


Outlook for Hormel Foods' second half
Ettinger said that he expects the current avian influenza situation to continue to challenge the company during the remainder of the fiscal year, but adds that companywide the diversified food company should benefit from the strengths of other business segments.
“While we enjoyed an excellent first half, we expect Jennie-O Turkey Store to be significantly challenged going forward due to the impacts of avian influenza on our turkey supply chain,” said Ettinger. “Refrigerated Foods and Grocery Products will continue to benefit from value-added product growth and lower pork input costs. Specialty Foods is positioned to deliver substantial earnings increases in the back half with the CytoSport business.”