DOW JONES NEWSWIRES
Hormel Foods Corp.'s (HRL) fiscal third-quarter profit soared
49% as earnings in its refrigerated foods segment jumped amid lower
costs and its long-struggling Jennie-O Turkey segment continued a
turnaround.
Earnings beat analysts' expectations, though sales missed Wall
Street views, which the company attributed to turkey-production
cuts.
The maker of Spam luncheon meat and Dinty Moore stews reaffirmed
last week's boosted fiscal-year earnings forecast.
Chairman and Chief Executive Jeffrey M. Ettinger said he expects
"an excellent year," despite challenges including the weak economy,
a continued excess supply of commodity turkey meat and difficult
export markets.
The meat industry, like many others, is dealing with a demand
slump that has led to cuts in production and prices.
For the quarter ended July 26, Hormel posted earnings of $77.2
million, or 57 cents a share, up from $52 million, or 38 cents a
share, a year earlier.
Net sales fell 6.2% to $1.57 billion. Volume dropped 4%.
Analysts surveyed by Thomson Reuters were expecting earnings of
52 cents a share on revenue of $1.7 billion.
Gross margin rose to 16.5% from 13.7%.
Jennie-O Turkey profit surged 97%, though sales fell 4.9% and
volume fell 2%, helped by lower feed costs due to reduced turkey
production.
Earnings in the refrigerated foods segment - by far Hormel's
biggest division - zoomed 60% due to strong export demand, though
sales declined 4.9%. Volume fell 1%.
Hormel also said last week that earnings have benefited from a
better investment performance in its rabbi trust, which had been
hard hit by the stock-market turmoil. Assets of the trust,
established to fund executive retirement and deferred income plans,
are invested in equity and income securities and generally track
the markets.
Shares of Hormel closed Wednesday at $37.24 and were inactive
premarket. The stock is up 20% so far this year through Wednesday's
close.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com