Spam feels inflationary pressures on Q2 earnings
Spam maker Hormel Foods Corp. is one of the latest firms to cite the effects of the rising prices of goods in its quarterly performance.
The giant food producer said its net profit for the three months ending April climbed to $237.4 million, or 44 cents a share, from $210.9 million, or 39 cents a share, in the same period last year, according to a report by the MarketWatch.
Its topline jumped to $2.33 billion from $2.19 billion, mostly driven by 2017 acquisitions made last year — its $850 million purchase of deli-meat company Columbus and its $425 million acquisition of Italian meats and sausages manufacturer Fontanini.
The refrigerated foods segment, as well as its international markets, helped the firm see an increase in profit anmid lackluster sales of its grocery products division which includes Spam.
The weak performance of the segment was attributed to rising costs of bringing these products in the market.
“This quarter, we saw a double-digit increase in per unit freight costs due to both the lack of availability of trucks and an increase in diesel-fuel surcharges,” Hormel Chief Executive Janes Snee was quoted.
“We continue to work with our customers to find mutually agreeable solutions to offset these increases,” the official added, projecting that the freight costs will continue to have an impact on their grocery goods through 2019.