Hormel Foods Corporation today reported its performance for the fiscal 2008 third quarter, which revealed that sales continue to grow, while earnings fell due to cost increases in the Jennie-O Turkey Store segment.

“We continue to generate strong top-line growth in both dollar sales and volume across all five of our operating segments,” said Jeffrey Ettinger, chairman of the board, president and chief executive officer. “As we previously announced, the higher feed input and fuel costs at our Jennie-O Turkey Store segment pressured profitability and contributed to the year over year decline in the company’s third quarter results. Relatively flat results in our Refrigerated Foods segment and a decline in investment income also presented unanticipated challenges during the quarter. In our Refrigerated Foods segment, strong fresh pork margins and pricing taken by our Meat Products and Foodservice Divisions were insufficient to overcome increased costs experienced by those divisions.”

The company reported fiscal 2008 third quarter net earnings of $51.9 million, down 9 percent from earnings of $57.4 million a year earlier. Diluted earnings per share for the quarter were $.38 this year compared to $.41 per share last year. Sales totaled $1.68 billion, up from $1.52 billion in fiscal 2007. For the nine months ended July 27, 2008, net earnings were $217.7 million, or $1.58 per diluted share (up 10 percent), compared to $200.7 million a year ago or $1.44 per diluted share. Sales totaled $4.9 billion, up 8 percent, from $4.5 billion in the same period last year.

Highlights

Diluted EPS of 0.38, down 7 percent from $.41 per share in 2007

Dollar sales of $1.68 billion increased 10 percent from 2007

Volume up 7 percent compared to last year

Operating profit down 2 percent from 2007

Grocery Products operating profit was up 11 percent; volume up was 10 percent; and dollar sales were up 10 percent.

Refrigerated Foods operating profit was down 1 percent; volume was up 4 percent (flat excluding acquisitions); and dollar sales were up 8 percent (up 4 percent excluding acquisitions).

Jennie-O Turkey Store operating profit was down 61 percent; volume was up 7 percent; and dollar sales were up 11 percent.

Specialty Foods operating profit was up 20 percent; volume was up 10 percent; and dollar sales were up 14 percent.

All Other operating profit was up 19 percent; volume was up 24 percent; and dollar sales were up 33 percent.

“We were encouraged by the strong top-line and bottom-line growth by our Grocery Products, Specialty Foods and All Other segments,” Ettinger said. “Our Grocery Products and All Other segments maintained the strong momentum they had during the first half of the year, and our Specialty Foods segment rebounded nicely under difficult operating circumstances.”

Effective Aug. 15, the company paid its 320th consecutive quarterly dividend. The annual rate is $.74.

“As stated in our pre-announcement on Aug. 8, we expect to see continued earnings pressure at Jennie-O Turkey Store from higher input costs, as the birds fed with higher grain prices make their way through the system. As stated previously, we are adjusting our full year guidance to $2.22-$2.28 per share, which is above our prior year results of $2.17 per share last year ($2.14 excluding the sale of assets in the fourth quarter). We continue to focus on our long-term objectives to grow the business through product innovation, increasing brand strength and adding value to our products,” Ettinger said.