Hormel reports second quarter earnings up from last year

Published 7:11 am Thursday, May 21, 2009

Hormel Foods Corp. reported today that its fiscal 2009 second quarter net earnings of $80.4 million were up 4 percent from earnings of $77.6 million in 2008.

Diluted earnings per share for the quarter were 59 cents this year compared to 56 cents per share last year and sales totaled $1.6 billion, even with fiscal 2008. For the six months ended April 26, 2009, net earnings were $161.8 million, or $1.20 per diluted share, the latter of which was even with last year. Sales totaled $3.3 billion, up 2 percent, from $3.2 billion in the same period last year.

“We are pleased to report record earnings for the quarter,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “Our Grocery Products segment again delivered increases in sales and segment profit, with strong sales of canned meats and Mexican products. Our Jennie-O Turkey Store segment continues to rebound, despite difficult market conditions, as they were faced with even lower commodity meat prices than in the first quarter.”

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Refrigerated Foods experienced another difficult quarter, Ettinger said; however, the Meat Products group showed double-digit increases.

“We have seen a continuation of some of the same trends we saw in the first quarter, as consumers seek value in retail channels while foodservice sales remain soft,” Ettinger said. “Unlike the first quarter, however, we have seen improvement in sales of some of our convenience items, including our refrigerated entrees and our Compleats microwave meals.”

The Grocery Products segment completed a strong quarter with sales up 4 percent and segment operating profit up 5 percent compared to last year. Sales were strong for the Spam family of products, Dinty Moore stews and Mexican products. These products created strong consumer demand because of their great value proposition.

Segment operating profit for Specialty Foods was down 1 percent, reflecting mixed results within the segment. Diamond Crystal Brands finished a strong quarter with increased sales of sugar substitutes and liquid portion products. Hormel Specialty Products realized solid growth in private label canned products. However, sales by these businesses were unable to completely offset decreased sales of nutritional and ready-to-drink products at Century Foods International.

Jennie-O Turkey Store achieved an outstanding 42 percent increase in segment operating profit. Lower feed expenditures due to a planned reduction of turkey production, as well as a reduced cost per ton, were the primary drivers of the improved profitability. The reduced production has helped offset the challenge of lower commodity meat prices, by minimizing our exposure to those markets.

“As a result of our better-than-expected first half, we now anticipate full year results in the upper end of our previously announced guidance range of $2.15 to $2.25 per share,” Ettinger said. “Despite potential ongoing challenges, which could include continued negative cutout margins, export market issues and commodity cost pressures, we believe our strong portfolio of branded products, with many good value offerings, and the strength of our management team, will lead to a solid performance this year.”