Hormel Foods has decided to divest its Brazilian operations, transferring control to local food manufacturer Zanchetta Alimentos as part of its initiative to “simplify and streamline its portfolio.”
Zanchetta Alimentos will take over the business associated with the Ceratti brand, which encompasses production facilities. Specific financial details about the transaction remain undisclosed.
In a concise statement released on June 29, Hormel Foods expressed its intention to “focus its international strategy on markets with the strongest long-term growth opportunities.” Just Food inquired about which markets these might be.
Hormel, known for its brands such as Skippy and Spam, acquired Ceratti in 2017 as part of its purchase of the Brazilian packaged meat firm Cidade do Sol.
In its financial disclosures, Hormel categorizes its operations into three main segments: retail, foodservice, and international. For the year ending October 26, Hormel’s international segment contributed 6% to its total net sales of $12 billion.
When assessed on an organic basis, the international segment achieved a slight increase in net sales of 1%, totaling $709.1 million within that year.
However, this segment reported a loss of $80.4 million, contrasting with a profit of $92.1 million from the previous year, primarily due to an impairment charge linked to a minority investment in Indonesia. Additionally, Hormel highlighted “competitive pressures” in Brazil during the fourth quarter.
In the second quarter of Hormel’s current fiscal year, which concluded on April 26, the international division saw a 5% rise in organic net sales, driven by “strong results” from Spam exports and Hormel’s operations in China.
The segment’s profit in the second quarter increased by 14.8% to reach $45 million, while Hormel’s overall profit across its segments was $609.2 million.
Earlier this year, in February, Hormel announced a sale of its whole-bird turkey business in the US to Life-Science Innovations.
Last October, the company entered an agreement with Forward Consumer Partners to spin off its Justin’s nut butter and chocolate snacks brand.
In its latest report, Hormel again pointed to “competitive pressures in Brazil” and declining market conditions as contributing factors that impacted adjusted international profit.