HORMEL FOODS CORP DE

Net sales and segment profit for each of the Company’s reportable segments are set forth below. The Company does not allocate deferred compensation, non-recurring expenses associated with the T&M initiative, gains or losses on the sale of businesses, investment income, interest expense, or interest income to its segments when measuring performance. The Company also retains various other income and expenses at the corporate level. Equity in earnings of affiliates is included in segment profit; however, earnings attributable to the Company’s corporate venturing investments and noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes.

The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report the profit and other financial information shown below.

Retail

In the first quarter of fiscal 2025, volume and net sales decreased compared to last year. Collectively, flagship and rising brands delivered growth relative to last year, led by the SPAM® brand, Applegate® natural and organic meats, Hormel® Black Label® bacon, Jennie-O® ground turkey, Wholly® guacamole, and Hormel® pepperoni. As anticipated, lower sales of snack nuts due to impacts from the production disruption at the Suffolk facility was a primary driver of the year-over-year net sales decline.

For the first quarter of fiscal 2025, segment profit declined as the benefits from the T&M initiative and margin growth from the Emerging Brands and Convenient Meals & Proteins verticals partially mitigated the impact from lower sales and higher raw material costs within the Snacking & Entertaining vertical, higher input costs, and unfavorable whole turkey dynamics.

For the second quarter of fiscal 2025, Retail segment profit is anticipated to decline versus the prior year. Year-over-year benefits from the T&M initiative and growth from the Value Added Meats and Bacon verticals are expected to be more than offset by a challenging snack nuts comparison and higher raw material costs.

Foodservice

(1) See the “Non-GAAP Measures” section below for a description of the Company’s use of measures not defined by U.S. GAAP.

Organic volume(1) and net sales growth in the first quarter of fiscal 2025 were driven primarily by strong performance across the premium prepared proteins, turkey, premium bacon, and breakfast sausage categories. Notable products such as branded Jennie-O® turkey items, Hormel® Fire Braised™meats, Café H® globally inspired proteins, and Cure 81® ham delivered strong volume and net sales growth.

Segment profit decreased for the first quarter of fiscal 2025 as higher sales were primarily offset by margin pressures in non-core businesses.

For the second quarter, the Company expects Foodservice segment profit to decline compared to the prior year, as organic top-line growth is expected to be more than offset by margin pressures in non-core businesses and higher input costs.

International

During the first quarter of fiscal 2025, strong volume and net sales growth in China and growth in exports such as SPAM®luncheon meat, Skippy®peanut butter, and fresh pork were more than offset by softness in Brazil and lower commodity turkey exports. The China business benefited from a continued focus on new customers and product offerings, which drove sales momentum within the foodservice channel. Within the China retail channel, the team deployed successful initiatives to gain new distribution, launch profitable innovation and increase promotional activity to offset consumer challenges. Strong shipments of the SPAM® family of products to the Philippines market was the largest contribution to export growth.

Segment profit increased in the first quarter of fiscal 2025, as improved export margins and growth in China were partially offset by softness in Brazil and lower equity in earnings.

In the second quarter of fiscal 2025, the Company expects International segment profit to decrease compared to the prior year. Value-added growth across China and Indonesia is expected to be more than offset by softness in Brazil.

Unallocated Income and Expense

Net unallocated expense increased for the first quarter of fiscal 2025 due to the loss on the sale of a non-core sow operation, the impact of lapping higher rabbi trust investment gains in the prior year, and higher employee-related expenses.