Hillshire Raises Dividend by 40%, Posts EPS Beat

Overcoming weak sales, Hillshire Brands (NYSE:HSH) marginally topped fourth-quarter profit expectations on Thursday and lifted its dividend by 40% to 17.5 cents a share.

The company also announced a new stock repurchase program of about $200 million over the next two fiscal years, which Hillshire CEO Sean Connolly said reflects the company’s pledge to deliver sustainable returns to investors.

"In this pivotal transition year … this affirms our confidence in the underlying business and enables us to return more cash to shareholders,” he said.

Adjusted for one-time items, the maker of Jimmy Dean sausage and Ball Park hot dogs said it earned 26 cents in the fourth quarter, beating average analyst estimates in a Thomson Reuters poll by a penny.

When including the costs related to its transition and marketing, Hillshire’s profit of $41 million, or 33 cents a share, was far below its year-earlier profit of $599 million, or $5.02 a share.

Revenue for the three months ended June 29 was $962 million, down 2.1% from $983 million a year ago, missing the Street’s view of $979.7 million.

While Jimmy Dean’s solid run continued during the quarter, the gains were more than offset by a material change in inventory levels at a large unnamed retail customer during the quarter, as well as softness in Hillshire Farm lunchmeat.

Looking toward the rest of the year, Hillshire expects sales to increase slightly, with momentum building in the latter half of the year. Adjusted EPS is expected to be flat to down slightly.

Shares of the meat giant were down about 1.5% in early trade on Friday to $33.35.