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Update: Hormel close to fifth-straight record year as 3Q profit increases

Published 6:44am Thursday, August 22, 2013

As Hormel’s profit climbed 2 percent last quarter, the company is three-quarters of the way to a fifth-straight record year.

Driven by better sales across all five segments and especially from brands Skippy and Jennie-O and international sales, the meatpacker reported this morning it earned $113.6 million, or 42 cents per share, for the quarter that ended July 28. That’s up from $111.2 million, or 41 cents per share, a year ago.

Analysts, on average, expected earnings of 45 cents per share, according to a FactSet survey.

For the nine months ended July 28, net earnings were $368.9 million, a hair better than the $367.4 million from the same period last year. That’s despite a lowered 2013 earnings outlook the company issued in June — from $1.93-$2.03 per share to $1.88 to $1.96 per share — citing higher costs and softer sales in its refrigerated foods division, and lower-than-expected results in its pork operations.

Hormel is slightly ahead of where it was a year ago, when the company finished 2012 with a record $500.1 million in profit. Four years ago, the company closed the 2009 fiscal year with $342.8 million in profit, a figure the company has clipped this year in three quarters.

Revenue rose 8 percent for the quarter to $2.16 billion from $2.01 billion, beating Wall Street’s estimate of $2.12 billion.

“We had a solid quarter, with all five segments reporting increased sales over last year,” said Hormel President and CEO Jeff Ettinger said.

Grocery products revenue increased 25 percent, benefiting from sales of Skippy. Hormel bought Skippy in January from Unilever for $700 million. Sales of Dinty Moore stew, Hormel Mary Kitchen hash and Hormel bacon toppings all improved.

For the refrigerated foods division, revenue edged up 2 percent on better sales of Hormel party trays, Hormel Natural Choice deli meats, Hormel Cure 81 hams, and food-service sales of Hormel Fire Braised meats and Hormel Pecanwood bacon.

Jennie-O Turkey Stores revenue climbed 4 percent on increased sales of Jennie-O Turkey Store ground turkey chubs and turkey bacon.

“Our Jennie-O Turkey Store segment delivered a strong quarter despite higher grain costs and lower commodity meat prices,” Ettinger noted.

Revenue for the specialty foods segment rose 5 percent thanks to higher sales of sweetener, nutritional products, ready-to-drink beverages and ingredients.

In the international division, revenue surged 31 percent on stronger exports of Spam products and fresh pork, a better performance from its China operations and the addition of the Skippy export business.

“Our international business continues to achieve impressive results led by strong export sales of our Spam family of products and fresh pork, as well as the addition of the Skippy business,” Ettinger said.

The Austin company still expects full-year earnings of $1.88 to $1.96 per share. Analysts are looking for earnings of $1.94 per share.

—The Associated Press contributed to this report.


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