Milling & Baking News Corporate Profiles - 2017 - 94

Company Overview

Hormel Foods Corp.
Management changes, portfolio transition continues

Chief executive officer -
James P. Snee

94 \ October 2017

Hormel Foods Corp.
net income
in millions
fiscal years ended in Oct.

$1.65 to $1.71 per share. In the face of a challenging year, we are focused on our strategic
initiatives and are committed to maintaining a
long-term perspective on our decisions."
Meanwhile, transition of Hormel's portfolio of
brands to become a broader and more global
food company continues.
"We continue to make excellent progress
toward our strategic growth initiatives," Mr.
Snee said in comments accompanying Hormel's
third-quarter results. That progress includes
the acquisitions of Fontanini Italian Meats and
Sausages and Ceratti, a premium value-added
meats company in Brazil, and a $130 million
expansion of production capacity for precooked
bacon at its Dold Foods plant in Wichita, Kas.
Hormel's portfolio includes Spam, Applegate,
Chi-Chi's, La Victoria, Skippy, Jennie-O Turkey,
Muscle Milk and about 30 others, several of
which were major acquisitions over the past six
years. Product launches this year within existing brands included House of Tsang Thai curry
sauces, Applegate sugar-free bacon, Hormel
Natural Choice all-natural deli meat snacks and
Muscle Milk Coffee House Protein Shakes.
Mr. Snee, speaking at the Barclays Global
Consumer Staples Conference in Boston in
September, said Hormel's long-term growth
consists of four key corporate goals: 5% topline growth (including internal and acquisition),
10% bottom-line growth, 15% of net sales by
2020 from items developed and innovated in
the past five years, and expanding margins to
the top quarter of its peers by 2020.
Hormel's six strategies designed to provide
momentum to achieve its goals include: continued diversifying, expanding and accelerating its food service business, expanding its
international footprint, reducing volatility and
increasing balance, divesting assets that do not
perform, and modernizing its supply chain.
Hormel is keen on adding to its international
portfolio with only 5% of current sales from
outside the United States, as well as targeting
millennials, a group that will be in its prime
consumption stage by 2020, and building ecommerce sales among other strategies. CP

2016

2015

2014

$890.5

$687.3

$606.0

Hormel Foods Corp.
net sales
in millions
fiscal years ended in Oct.

he transition in top leadership at Hormel
Foods Corp. that has been going on the
past couple of years will reach its apex
on Nov. 20 as James P. Snee, current president
and chief executive officer, succeeds retiring
Jeffrey M. Ettinger as chairman.
After a year of quarterly and annual record
sales in 2016, Austin, Minn.-based Hormel
lowered its full-year guidance for 2017 due to
weak quarterly performance when announcing
third-quarter results in August. Despite record
pre-tax earnings that were up 1% from a year
earlier, third-quarter diluted earnings and sales
revenue and volume were down in part due to
high costs for pork bellies (from which bacon
comes) and beef trimmings, a weak market for
turkey and continued poor results in China.
"Our team is working to mitigate the effects
of volatile commodity markets through increasing pricing, strategic promotional activity and
our on-going innovation efforts," Mr. Snee said.
"We expect continued earnings pressure from
higher input costs for key raw materials such
as bellies, pork trim and beef trim. While we
have communicated price increases in many
categories, the increases will not be fully effective until late in the fourth quarter.
"We are lowering our full-year guidance to
$1.54 to $1.58 per share from the low end of

2016

$9,523.2

2015

$9,263.9

2014

$9,316.3

Hormel Foods Corp.
share price

per share
$39

$36

$33

$30
Sept. Dec. Mar. June Sept.
2016
2017
2017

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