Hormel Foods saw its international net sales drop 2% and international volumes drop 13% during the third quarter of fiscal year 2024.
Yet during an earnings call on September 4, Hormel President and CEO Jim Snee didn’t seem the least bit bothered by it. He even appeared to be happy with the situation.
Why wouldn’t he be? While the international sales and volumes were down for the U.S.-based food company, the profit for Hormel’s international business segment was up 78% when compared to the same quarter of 2023.
And he credits that to strong branded and refrigerated foods exports, as well as good supply management for the company’s Jennie-O Turkey Store subsidiary.
The company, and particularly in its turkey operations, has been shifting emphasis away from commodity turkey sales and more toward value-added turkey products. And that has worked, he said.
“Commodity exports, which have historically benefited the international top line, but delivered lower profitability than other elements of the portfolio, were down significantly year-over-year. This is a result of improved inventory management and stronger sales of value-added turkey items in the domestic U.S. market,” Snee explained.
A press release from Hormel Foods also indicated that the company sold lower volumes of commodity pork during the most recent quarter than it did during the same period a year ago.
Strengths of value-added turkey products
Jennie-O value-added turkey products are also sold within Hormel’s retail and foodservice business segments, and both were seen as strengths.
While both business segments saw declining profits on a year-over year basis, Jennie-O ground turkey was seen as a strength for the diversified agrifood company, while the company said in the foodservice segment, “growth from branded Jennie-O turkey items continue to benefit top-line results.
Hormel Foods Chief Financial Officer Jacinth Smiley said the remainder of the fiscal year looks promising for Jennie-O sales.
“In turkey, our supply remains healthy and we are in a strong position to service our customers and attract new business opportunities. We’re projecting growth across several parts of our Jennie-O branded turkey business, including lean ground turkey in retail and value-added turkey in foodservice,” she said.
However, she added, “Lower volumes and pricing for commodity whole turkey are expected to continue to pressure earnings.”
