Hormel 3Q net earnings, sales increase

by Bryan Salvage
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AUSTIN, Minn. – Hormel Foods Corporation announced for its fiscal year 2011 third quarter, earnings growth was led by its Grocery Products and Jennie-O Turkey Store segments. Net earnings totaled $98.5 million, up 15 percent from net earnings of $85.4 million a year earlier. For the nine months ended July 31, 2011, net earnings were $356.9 million, up 24 percent from adjusted net earnings of $287.8 million the same period last year.

Sales for the quarter totaled $1.9 billion, up 10 percent from the same period in fiscal 2010. For the nine months ended July 31, sales totaled $5.8 billion, up 12 percent from the same period last year.

“We are pleased to report improved earnings per share and sales for the quarter, which were up 13 percent and 10 percent, respectively,” said Jeffrey Ettinger, chairman of the board, president and CEO.

Hormel’s Grocery Products segment generated solid results, benefitting from strong sales of Mexican products by the company’s MegaMex Foods joint venture and SPAM family of products.

“I was pleased to see sales of our Hormel Compleats microwave meals grow nicely in the quarter,” Ettinger said. “Our Jennie-O Turkey Store segment delivered another good quarter, aided by strong value-added sales and operational and supply-chain efficiencies.”

Hormel’s international business in its All Other segment achieved impressive results led by strong pork export sales. “Lower pork operating margins hindered our Refrigerated Foods segment results and our Specialty Foods segment was pressured by higher than expected raw material costs during the quarter,” Ettinger said.

The Grocery Products segment exceeded last year’s profitability by 19 percent. Net sales increased over last year’s results by 4 percent. Improved sales of the SPAM family of products, as well as of Mexican food products by the company’s MegaMex Foods joint venture, helped offset higher commodity input costs. Sales of Hormel Compleats microwave meals also grew during the quarter.

Refrigerated Foods segment profit declined by 12 percent, primarily due to lower pork operating margins. Net sales for the quarter increased 10 percent, with strong contributions from products such as Hormel pepperoni, bacon, party trays, Natural Choice deli meats and Country Crock sides.

Jennie-O Turkey segment operating profit was up 14 percent from a year ago. Increased value-added sales and improved efficiencies contributed to the good results. Net sales for the quarter increased 11 percent.

The Specialty Foods segment operating profit declined 8 percent, due to higher raw material costs. Net sales grew 11 percent, led by higher sales of private-label canned meats and sugar.

The All Other segment, which consists primarily of Hormel Foods International, increased segment profit 67 percent and net sales by 35 percent, driven principally by stronger exports of fresh pork and improved results by international joint ventures.

Hormel is raising its full year guidance range to $1.70 to $1.75 per share from $1.67 to $1.73 per share, Ettinger concluded.
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