Hormel Foods Corporation (HRL) has reported a 30.29 percent jump in profit for the quarter ended Oct. 30, 2016. The company has earned $243.94 million, or $0.45 a share in the quarter, compared with $187.23 million, or $0.35 a share for the same period last year.
Revenue during the quarter grew 9.46 percent to $2,627.94 million from $2,400.86 million in the previous year period. Gross margin for the quarter expanded 216 basis points over the previous year period to 22.78 percent. Total expenses were 86.08 percent of quarterly revenues, down from 87.82 percent for the same period last year. This has led to an improvement of 173 basis points in operating margin to 13.92 percent.
Operating income for the quarter was $365.75 million, compared with $292.50 million in the previous year period.
“We had a strong finish to fiscal 2016, achieving record earnings for the fourteenth consecutive quarter,” said Jim Snee, president and chief executive officer. “Three of our five business segments delivered sales, volume, and earnings growth, again demonstrating our balanced business model. Refrigerated Foods and Jennie-O Turkey Store both had excellent quarters with growth coming from value-added, branded products and improved market conditions. Grocery Products enjoyed a strong quarter aided by the inclusion of the JUSTIN’S specialty nut butter business in addition to strong results from SPAM luncheon meat and SKIPPY peanut butter,” Snee said.
For financial year 2017, the company projects diluted earnings per share to be in the range of $1.71 to $1.77.
Operating cash flow remains almost stable
Cash flow from operating activities was almost stable for the quarter at $992.85 million, when compared with the previous year period
The company has spent $408.96 million cash to meet investing activities during the year as against cash outgo of $900.95 million in the last year.
The company has spent $509.65 million cash to carry out financing activities during the year as against cash outgo of $70.63 million in the last year period.
Cash and cash equivalents stood at $415.14 million as on Oct. 30, 2016, up 19.56 percent or $67.90 million from $347.24 million on Oct. 25, 2015.
Working capital increases
Hormel Foods Corporation has recorded an increase in the working capital over the last year. It stood at $976.72 million as at Oct. 30, 2016, up 15.04 percent or $127.71 million from $849.01 million on Oct. 25, 2015. Current ratio was at 1.93 as on Oct. 30, 2016, up from 1.70 on Oct. 25, 2015.
Days sales outstanding were almost stable at 11 days for the quarter, when compared with the last year period.
Days inventory outstanding was almost stable at 24 days for the quarter, when compared with the last year period.
Debt comes down significantly
Hormel Foods Corporation has recorded a decline in total debt over the last one year. It stood at $250 million as on Oct. 30, 2016, down 42.53 percent or $185 million from $435 million on Oct. 25, 2015. Total debt was 3.92 percent of total assets as on Oct. 30, 2016, compared with 7.08 percent on Oct. 25, 2015. Debt to equity ratio was at 0.06 as on Oct. 30, 2016, down from 0.11 as on Oct. 25, 2015. Interest coverage ratio improved to 111.24 for the quarter from 76.55 for the same period last year.
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