Hormel Foods Corp. expects strong growth in 2020, the company revealed in its Q4/end of year earnings report.
"In 2020, we expect to grow operating income as we did in 2019 while also growing sales," says Jim Snee, chairman of the board, president and CEO. "We are excited about our growth prospects in foodservice, retail and deli, led by brands such as SPAM®, Wholly®, Jennie-O®, Hormel® Natural Choice®, Hormel® Gatherings® and Applegate®. We are also putting a lot of energy behind our recent innovations in brands such as Herdez®, SKIPPY®, Columbus® and Hormel® Bacon 1TM. I am confident we have the right strategy, business model and leadership team to continue delivering long-term sustainable growth."
The company's outlook assumes higher protein prices and further volatility related to the impact from African swine fever and global trade uncertainty. The company's expected fiscal 2020 organic pretax earnings growth rate is in line with the company's near-term goal of 5-7% organic pretax earnings growth. As a reminder, CytoSport earnings in 2019 contributed 10 cents to earnings per share. The company also expects a higher effective tax rate in fiscal 2020 with a range of 20.5% and 22.5%.
In 2019, Hormel reported:
- Volume of 4.74 billion lbs., down 1%; organic volume1 flat
- Net sales of $9.50 billion, down 1%; organic net sales1 up 1%
- Operating income of $1.20 billion, up 1%
- Operating margin of 12.6% compared to 12.4% last year
- Effective tax rate of 19.1% compared to 14.3% last year
- Diluted earnings per share of $1.80, down 3% from $1.86 last year
- Cash flow from operations of $923 million, down 26% due to higher working capital
Q4 numbers include:
- Volume of 1.24 billion lbs., down 2%; organic volume1 up 1%
- Net sales of $2.50 billion, down 1%; organic net sales1 up 2%
- Operating margin of 12.8% compared to 12.7% last year
- Effective tax rate of 21.0% compared to 18.7% last year
- Diluted earnings per share of $0.47, down 2% from $0.48 last year