Despite strong sales of Spam, Hormel Foods reported their Grocery Products segment was down this quarter, the company reported today.

“The lower results were driven primarily by higher beef and pork trim costs, but also as a result of a slowdown of our Hormel Compleats microwave meal business,” stated Jeff Ettinger, president, CEO and chairman of the board in the company’s fiscal 2008 fourth quarter and full year report. “Our Jennie-O Turkey Store segment continued to experience higher feed and fuel input costs during the quarter that they were unable to offset with increased pricing. An industry-wide over-supply of breast meat kept prices below our cost of production.

“We do not expect this situation will significantly improve until next spring,” Ettinger said.

The Grocery Products segment reported a 3 percent decrease in operating profit for the quarter compared to last year.

Other segments, such as Refrigerated Foods and Specialty Foods, reported increases for the quarter, attributed to the improved spread between hog costs and primal values, and the acquisition of Boca Grande Foods, which enhanced the results of Diamond Crystal Brands.

The All Other segment, which includes the International business unit, achieved double-digit increases in both sales and tonnage, primarily due to strong exports of fresh pork and the Spam family of products. In spite of these gains, operating profit for the quarter decreased 8 percent, due to higher than expected raw material costs and a stronger dollar.

Fourth Quarter

Diluted EPS of $.50, down 32 percent from $.73 per share in 2007 ($.70 excluding the sale of assets)

Segment operating profit decreased 5 percent from last year

Dollar sales of $1.86 billion increased 12 percent from 2007 (up 10 percent excluding acquisitions)

Volume up 3 percent from 2007

Grocery Products operating profit down 3 percent; volume down 1 percent; dollar sales up 6 percent

Refrigerated Foods operating profit up 12 percent; volume up 1 percent (flat excluding acquisitions); dollar sales up 11 percent (up 9 percent excluding acquisitions)

Jennie-O Turkey Store operating profit down 44 percent; volume up 4 percent; dollar sales up 11 percent

Specialty Foods operating profit up 49 percent; volume up 10 percent (up 4 percent excluding acquisitions); dollar sales up 20 percent (up 16 percent excluding acquisitions)

All Other operating profit down 8 percent; volume up 30 percent; dollar sales up 34 percent

Net Interest and Investment Income was down significantly, due to rabbi trust losses of $20.4 million

Fiscal Year

Diluted EPS of $2.08, down 4 percent from $2.17 per share in 2007 ($2.14 excluding the sale of assets)

Segment operating profit increased 6 percent from last year

Dollar sales of $6.75 billion increased 9 percent from 2007 (up 7 percent excluding acquisitions)

Volume up 5 percent

Grocery Products operating profit up 5 percent; volume up 3 percent; dollar sales up 8 percent

Refrigerated Foods operating profit up 22 percent; volume up 4 percent (up 1 percent excluding acquisitions); dollar sales up 8 percent (up 4 percent excluding acquisitions)

Jennie-O Turkey Store operating profit down 27 percent; volume up 6 percent; dollar sales up 9 percent

Specialty Foods operating profit up 14 percent; volume up 5 percent (up 3 percent excluding acquisitions); dollar sales up 12 percent (up 11 percent excluding acquisitions)

All Other operating profit up 17 percent; volume up 16 percent; dollar sales up 27 percent

Net Interest and Investment Income was down significantly, due to rabbi trust losses of $29.0 million

The company reported fiscal 2008 fourth quarter net earnings of $67.8 million, down 33 percent from earnings of $101.2 million a year earlier. Included in this year’s quarterly results is a $20.4 million investment loss in the company’s rabbi trust, compared with a $4.6 million gain a year ago. Diluted earnings per share for the quarter were $.50 this year compared to $.73 per share last year and sales totaled $1.86 billion, up from $1.66 billion in fiscal 2007.

For the 12 months ended Oct. 26, 2008, net earnings were $285.5 million, or $2.08 per diluted share (down 4 percent), compared to $301.9 million a year ago, or $2.17 per diluted share. Included in this year’s annual results was a $29.0 million loss in the rabbi trust, compared with a gain of $6.9 million a year ago. Sales totaled $6.75 billion, up 9 percent, from $6.19 billion in the same period last year.