Hormel Foods’ Q3 earnings were impacted by a production disruption identified in April at a Planters facility in Suffolk, Virginia, according to a Sept. 4 earnings call.
Since the incident, Hormel has taken “corrective action” to further alleviate issues. The food manufacturer secured co-packer partnerships to improve fill rates in its snack nuts as it finishes plant upgrades and ramps production back up, said President and CEO Jim Snee.
Hormel has since made “important improvements,” including upgrading equipment and refining its production process, a spokesperson told Supply Chain Dive in an email.
Any lingering impact from the disruption is expected to be resolved by the end of the fiscal year, Snee told analysts.
While the food safety issue that spurred the production interruption has already been resolved, per a Q2 earnings call, it hasn’t been the only supply issue the company has battled this year.
Highly Pathogenic Avian Influenza, or HPAI, was detected in Hormel’s turkey supply chain during the first nine months of fiscal year 2024, per the filing. While the impact has lessened, Hormel anticipates an ongoing reduction in production volume in its turkey facilities throughout the fiscal year, further noting that the company has “developed business continuity plans” for various scenarios.
In a Q4 10-K filing, Hormel reported that outbreaks of diseases among its livestock and poultry flocks could “adversely affect the Company’s supply of raw materials, increase the cost of production, reduce utilization of the Company’s harvest facilities, and reduce operating margins.”
The supply issues have come after the food manufacturer announced plans last year to invest $200 million in its supply chain to help modernize its operations. Part of the plan was to use funds to convert its plant in Barron, Wisconsin, to simplify its supply chain and better support its brand portfolio.
The company also hired Steve Lykken as its new group VP of supply chain in February to lead procurement, manufacturing and plant operations.
