Hormel Foods Predicts Earnings Impact From Lower Turkey Markets & Softness In China Business In H1: Details

Hormel Foods Corp HRL reported a fourth-quarter FY23 sales decline of 2.6% year-on-year to $3.198 billion, missing the analyst consensus estimate of $3.264 billion.

Segment Sales: Retail sales declined 4%, Foodservice gained 2%, and International sales decreased 12%.

Adjusted EPS of $0.42 missed the consensus estimate of $0.44.

Gross margin contracted 120 basis points Y/Y to 16.1%. The operating margin was 8.4%, and operating income for the quarter fell 26.5% to $270 million.

Selling, general and administrative expenses increased 4.9% Y/Y to $216.5 million.

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The company held $753.2 million in cash and equivalents as of October 29, 2023. Operating cash flow for the quarter totaled $319 million.

Outlook: Hormel sees FY24 sales of $12.2 billion - $12.5 billion versus the consensus of $12.28 billion.

HRL sees FY24 adjusted EPS of $1.51 - $1.65 against the Street view of $1.68.

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.

"Looking ahead, our teams continue to navigate through a dynamic operating environment characterized by slowing consumer demand, inflationary pressures and headwinds in our turkey business," said Jim Snee, chairman of the board, president and CEO. 

Price Action: HRL shares are trading lower by 1.10% at $31.60 in premarket on the last check Wednesday.