Hillshire Farm luncheon meat and Jimmy Dean sausage helped Hillshire Brands (HSH) post stellar results in what is likely its last earnings report as a stand-alone company, helped by cost cutting that helped it overcome price increases that were below inflation.
Hillshire reported revenue rose 11% to $1.06, while analysts polled by Thomson Reuters were expecting $994 million. In July, Tyson Foods (TSN), the largest U.S. processor of chicken and a major pork producer, said it would buy Hillshire for $7.7 billion, winning a bidding war with Pilgrim’s Pride (PPC). While the deal is expected to close around Sept. 27, the companies this week got requests from the U.S. Department of Justice’s Antitrust Division for some additional information, which they said were about small bits of its business. In any event, Hillshire’s outstanding numbers show why Tyson was smart to pay such a handsome sum.
Hillshire, which was known as Sara Lee before spinning off its coffee and tea business in 2012, reported income from continuing operations for the period ended June 28 of $27 million, or 22 cents a share, up from $35 million, or 28 cents a share, a year earlier.
Net sales in the company’s retail division rose 8.5% as a catchy ad campaign lifted demand for Hillshire Farm lunchmeat, and its Ball Park hot dogs were again a big hit during grilling season. Flame Grilled Patties were also a hit. The food service division’s sales jumped 17% despite lower volume, thanks to higher prices. At convenience stores, the new Jimmy Dean roller grill sausages did well again, while bakery sales were up on the popularity of Hillshire’s new pre-sliced Luxe Layer pie.