AUSTIN, Minn. – Sales of Jennie-O turkey combined with lower pork and beef costs lifted second quarter earnings for Hormel Food Corp.
Net income for the company increased 16.7 percent to $127.9 million (48 cents per share) from $109.6 million (40 cents per share) in the comparable quarter in 2011. Revenues for the quarter advanced 2.7 percent to $2.01 billion.
“We are pleased to report record earnings and sales for the second quarter. This is a good example of our balanced business model in action, as we were able to increase earnings in four out of five segments,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “Sales grew three percent, again with four of our five segments registering gains.”
“Our Jennie-O Turkey Store segment delivered another outstanding quarter, driven by value-added sales growth. Our International business also achieved impressive results, led by strong export sales. Both our Grocery Products and Specialty Foods segments returned to earnings growth during the quarter. Results of our Refrigerated Foods segment were significantly pressured by lower pork operating margins,” Ettinger said.
“We are particularly encouraged by the continued growth of our Jennie-O Turkey Store value-added sales and our MegaMex Foods joint venture,” he added.
Refrigerated Foods represented 51 percent of net sales and 27 percent of total segment operating profit, according to the company. Profit for the Refrigerated Foods segment declined 25 percent, attributable mostly to lower pork operating margins during the quarter, Hormel said. Net sales for the quarter eased 1 percent, with lower commodity pork sales offsetting strong sales of the company's Natural Choice deli meats, party trays, pepperoni and Dilusso deli products. Foodservice value-added sales also grew during the quarter, according to Hormel.
Jennie-O Turkey Store, which accounted for 20 percent of net sales and 35 percent of total segment operating profit, had a strong quarter, with segment operating profit up 50 percent on value-added sales. Net sales for the quarter advanced 7 percent, led by sales of Jennie-O Turkey Store retail tray pack and turkey burgers, the company said.
The Grocery Products segment accounted for 13 percent of net sales, and 22 percent of total segment operating profit, according to the company. Operating profit for the segment increased 10 percent, boosted by lower pork and beef costs. Net sales were higher by 1 percent compared to the year-ago quarter. Strong results from SPAM products and MegaMex Foods products offset soft sales of microwave products and Dinty Moore stew, the company said.
The Specialty Foods segment operating profit rose 9 percent, as pricing actions taken earlier helped offset higher raw material costs, Hormel said. Net sales grew 12 percent on sales of private label canned meats, ingredients, bulk and nutritional items. The segment accounted for 11 percent of net sales and 10 percent of total segment operating profit, the company said.
The All Other segment, which consists primarily of Hormel Foods International, grew segment profit 52 percent, and grew net sales by 11 percent, driven by stronger exports of fresh pork and the SPAM line of products, Hormel. The segment accounted for 5 percent of net sales and 6 percent of total segment operating profit, according to the company.