Hormel Foods (NYSE:HRL) warned it expects earnings in the first half of the new financial year to fall reflecting weak markets for turkey products.
The maker of Spam and Skippy peanut butter made the prediction as it reported financial fourth quarter sales of $3.20 billion, down from $3.28 billion the year before, with net earnings of $195.5 million, down from $280.0 million.
Diluted EPS fell to $0.36 from $0.51, the Austin, Minnesota-based company said.
"Despite challenging operating conditions to end the year, our results were in line with the low end of our revenue and adjusted net earnings per share expectations, as a strong finish from our Foodservice segment was offset by pressure in our Retail and International businesses,” said Jim Snee, chairman of the board, president and chief executive officer.
In the retail business, Hormel said volume and net sales growth from the value-added meats, emerging brands and bacon verticals was more than offset by declines in the convenient meals and proteins, and snacking and entertaining verticals.
Foodservice volume and net sales for the quarter increased, driven by a significant recovery across the Jennie-O turkey portfolio and strong demand for premium bacon, pizza toppings and premium breakfast sausage.
But international sales declined as a result of lower branded export volumes and lower sales in China, primarily related to the retail business.
Looking ahead, Smee said 2024 would be a year of investment, consistent with the plan we outlined at its recent investor day.
Hormel forecasts net sales growth of 1% to 3%, which assumes volume growth in key categories, higher brand support and innovation, a benefit from incremental pricing actions and current assumptions for raw material input costs.
Diluted net earnings per share are predicted between $1.43 to $1.57 and adjusted diluted net earnings per share1 to be $1.51 to $1.65.
The company expects earnings to decline in the first half of the year due to the impact from lower turkey markets, lower volumes in the retail segment and softness in its China business.
Shares fell 2.9% in pre-market trading.