Hormel Foods 2013 Annual Report Download - page 4

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Grocery Products provided signifi cant revenue and earnings
growth this year, buoyed by the acquisition of the SKIPPY®
line of products early in the year. The SKIPPY® purchase
was the largest transaction in our history, offering us an
opportunity to create value for our shareholders by
employing our strong balance sheet. The acquisition of the
SKIPPY® line added another iconic protein brand to our
portfolio, providing an excellent platform for innovation in
new categories. This acquisition also brought additional
diversifi cation to our input mix, and with sales in over
30 countries on 5 continents, allowed us to more quickly
expand our footprint in markets outside of the United
States. Our team has done an excellent job fully integrating
the SKIPPY® business in all areas with the exception of the
China business, which closed subsequent to the end of the
fi scal year with integration to follow shortly thereafter.
Our Refrigerated Foods segment faced volatile input costs
throughout the year along with retail softness in some areas
of their business. By continuing to expand the value-added
portfolio through innovation, along with improving the
product mix, the segment was able to deliver a modest
increase in both revenue and earnings over last year.
Our Jennie-O Turkey Store segment faced several chal-
lenges during the year, including high grain costs and
weaker commodity meat markets. While full year earnings
declined, our team was able to increase revenue by
continuing to grow its sales of value-added items.
While the Specialty Foods segment grew sales and earnings
for the year, this segment was negatively affected late in
2013 due to the expiration of the agreement allowing it to
sell certain sugar substitutes, which will continue as a
headwind into 2014. The Specialty Foods team is focused
on developing branded product innovations to contribute to
revenue and earnings growth in the future.
The International & Other segment continued to drive
double-digit growth in sales and earnings in 2013. With a
focus on further developing markets for the SPAM® family
of products and exports of niche fresh pork items, expan-
sion of business in China, and now the SKIPPY® line of
products, we anticipate similar growth by this segment in
2014 and beyond.
Innovation is the key to staying relevant with consumers,
allowing us to deliver sustainable growth and value to our
shareholders over the long-term. Innovation efforts
across all segments focus on answering the unmet needs
of consumers and customers. An excellent example of our
Hormel Foods continues to grow, achieving sales growth of 6%, and increasing earnings
per share by 5% in 2013 to a record $1.95 per share.
2
Jeffrey M. Ettinger
Chairman of the Board,
President and
Chief Executive Offi cer
DEAR FELLOW SHAREHOLDERS
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