Jennie-O Turkey Store’s profits continued to be down during the third quarter of fiscal year 2018, but the company did have good news to report as net sales and volumes increased.
Hormel Foods, parent company of Jennie-O Turkey Store, just reported the financial results for the third quarter, and during an earnings call on August 23, Hormel Foods CEO remained upbeat on the Jennie-O segment.
The segment’s profit was down 23 percent on a year-over-year basis, but net sales were up 8 percent and volume was up 14 percent.
“Our three value-added businesses all grew volume and sales this quarter,” Snee said, referencing Jennie-O premium deli products, ground turkey and oven-ready products.
He added that earlier shipments of whole birds helped the company financially, as it helped Jennie-O Turkey Store to minimize cold storage expenses.
Outlook for upcoming quarters
Snee, along with Hormel Foods Chief Financial Officer Jim Sheehan, said they expect the turkey segment and turkey industry as a whole to continue to see struggles on the short term, but improvement on the long term.
“We still expect earnings to decline in the fourth quarter, compared to last year,” said Snee. “We see the fundamentals slowly improving and are encouraged by trends in the turkey breast meat market.”
Sheehan elaborated on signs of a slow recovery in the turkey industry.
“Poult placements have shown low single digit declines in recent months, which indicates lower harvest levels in the coming quarters. Turkey breast meat and whole birds in cold storage are still well above long-term average levels,” said Sheehan.
“Breast meat prices increased during the quarter. Breast meat averaged $1.88 per pound, compared to $1.53 last year. We expect moderate increases in the coming quarters. Whole bird prices are 17 percent lower than 2017 levels, and we do not expect a material change in pricing until the first quarter of fiscal year 2019.”
Snee added that he expects sales of Jennie-O ground turkey to be strong in upcoming quarters as it revives its “Make the Switch” advertising campaign, which encourages consumers to eat ground turkey as an alternative to ground beef.