Hormel earnings climb 13% in 3Q

by Meat&Poultry Staff
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AUSTIN, Minn. – Hormel Foods Corp. reported net earnings of $111.2 million, a 13 percent increase from $98.5 million in 2011.

For the nine months ended July 29, 2012, net earnings rose 3 percent to $367.4 million, up from net earnings of $356.9 million the same period in 2011. Diluted net earnings per share for the nine months were $1.37, up 5 percent from diluted net earnings per share of $1.31 in 2011.

Sales for the quarter advanced 5 percent to $2.0 billion. For the nine months ended July 29, sales advanced 5 percent to total $6.1 billion.

“We had an excellent quarter, with earnings per share and sales up 14 percent and 5 percent, respectively,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “All five segments reported increased earnings, led by our Grocery Products segment. Our strong sales growth across multiple segments demonstrates that our products are connecting well with consumers.

“Our Grocery Products segment benefited from strong sales of our Spam family of products and from our MegaMex Foods joint venture. I was also pleased to see sales of our Hormel Compleats microwave meals grow nicely in the quarter. Our Jennie-O Turkey Store segment delivered another good quarter, aided by increased value-added sales and an improved product mix.

"Our international business continues to achieve impressive results, led by strong export sales of our Spam family of products and fresh pork. Increased value-added sales offset lower pork operating margins, boosting our Refrigerated Foods segment results during the quarter. Our Specialty Foods team generated excellent results on higher sales during the quarter,” Ettinger said.

The Grocery Products segment contributed 15 percent of net sales and 23 percent of total segment operating profit, according to the company. Segment profit advanced 32 percent, led by improved sales of Spam products and by the MegaMex Foods joint venture. Net sales increased over 2011 results by 21 percent, including sales of Don Miguel products.

The Refrigerated Foods segment contributed 52 percent of net sales and 35 percent of total segment operating profit. Segment profit improved by 7 percent on stronger results by the company's Meat Products and Foodservice businesses which also offset lower pork operating margins. Net sales for the quarter were flat, while value-added sales increased including sales of Hormel Natural Choice deli meats, Hormel party trays, Hormel bacon, and Hormel pepperoni, according to the company.

Jennie-O Turkey Store accounted for 18 percent of net sales and 23 percent of total segment operating profit, according to the company. Jennie-O Turkey Store had a solid quarter, with segment operating profit up 12 percent from 2011 figures. Increased value-added sales and an improved product mix offset higher feed costs and lower commodity meat prices. Net sales for the quarter climbed 7 percent, led by sales of Jennie-O Turkey Store fresh tray pack products and turkey burgers.

Specialty Foods contributed 11 percent of net sales and 12 percent of total segment operating profit. Segment profit increased 18 percent, as all three business units recorded gains. Net sales grew 11 percent, led by higher sales of bulk and nutritional items, private label canned meats and ingredients, the company said.

“Our excellent results in the third quarter give us momentum heading into the fourth quarter and put us on track to achieve results consistent with our annual guidance range of $1.79 to $1.89 per share,” Ettinger said. “Increased grain costs will present a challenge, but the strength of our balanced business model and the vibrancy of our branded, value-added portfolio should support continued sales and earnings growth as we close out fiscal 2012.”

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