Hormel Foods Reports Slight Increase in Net Sales but Decline in Profitability for Q2 Fiscal 2025

Hormel Foods Corporation reported its financial results for the second quarter of fiscal 2025, revealing a slight increase in net sales but a decline in profitability compared to the same period last year. The company generated net sales of $2.9 billion, a 0.4% increase from $2.89 billion in the prior year. However, net earnings attributable to Hormel Foods decreased by 4.9% to $180 million, or $0.33 per diluted share, down from $189 million, or $0.34 per diluted share, in the same quarter of the previous year.

The company's gross profit for the quarter was $484 million, reflecting a 3.8% decline from $504 million a year earlier, primarily due to increased costs of products sold, which rose by 1.3% to $2.41 billion. The decrease in profitability was attributed to higher commodity input costs, particularly for pork and beef, which offset the benefits from operational efficiencies achieved through the company's Transform and Modernize initiative. Selling, general, and administrative expenses also decreased by 5.7% to $251 million, contributing to a slight improvement in operational efficiency.

In terms of strategic developments, Hormel Foods completed the divestiture of its non-core sow operation, Mountain Prairie, LLC, for $13.6 million, resulting in a pre-tax loss of $11.3 million. The company continues to focus on its core business segments, which include Retail, Foodservice, and International. The Retail segment reported net sales of $1.78 billion, a slight decrease from the previous year, while the Foodservice segment saw a modest increase to $936 million. The International segment experienced a notable 7% increase in sales, driven by strong performance in the China market.

Operationally, Hormel Foods reported a decrease in volume, with total pounds sold down 5.7% to 999 million. The company noted that organic net sales increased by 1% due to growth in the Foodservice and International segments, while the Retail segment remained stable. The company’s cash flow from operations was $366 million for the first half of fiscal 2025, a significant decrease of 43% compared to the same period last year, primarily due to an increase in inventory levels in anticipation of the summer selling season.

Looking ahead, Hormel Foods expects net sales growth across all segments in the third quarter of fiscal 2025, driven by continued demand for its products and the anticipated benefits from its ongoing strategic initiatives. The company remains committed to maintaining its dividend policy, having increased its annual dividend rate for fiscal 2025 to $1.16 per share, marking the 59th consecutive annual increase.