Hormel earnings propelled by Jennie-O, exports

by Keith Nunes
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AUSTIN, MINN. — Value-added turkey products sold under the company’s Jennie-O Turkey Store brand and exports pushed the Hormel Foods Corp.’s net income higher during the second quarter of fiscal 2012.

Net income during the second quarter ended April 29 was $127,887,000, equal to 49c per share on the common stock, an increase compared with the same period during the previous year when net income was $109,579,000, or 41c per share.

Sales for the quarter were $2,012,859,000, a slight increase compared with sales of $1,959,041,000 during the second quarter of fiscal 2011.

“We are pleased to report record earnings and sales for the second quarter,” said Jeffrey M Ettinger, chairman of the board, president and chief executive officer. “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. Sales grew 3%, 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.

“We are particularly encouraged by the continued growth of our Jennie-O Turkey Store value-added sales and our MegaMex Foods joint venture.”

Operating profit for Hormel’s Jennie-O Turkey Store business unit rose 50% during the quarter to $70,198,000. Sales for the business unit rose 5% to $768,424,000.

Both the company’s Refrigerated Foods and Grocery Products divisions saw their operating profits decline during the quarter. Operating profit in the Refrigerated Foods segment declined 35% to $106,758,000 compared with the previous year. In the Grocery Products unit, operating profit declined slightly, to $86,951,000 during the quarter from $87,610,000 during the previous year.

Sales for the Refrigerated Foods segment rose 3% to $2,115,500,000. Grocery Products sales declined slightly to $533,472,000 from $537,172,000.

“Our second-quarter results provide positive momentum heading into the back half of the year,” Mr. Ettinger said. “We believe continued weaker pork operating margins will be more than offset by stronger results from our other segments. We expect sales in the center of the store to slowly improve as we continue our advertising support of our Hormel and Spam brands. Taking all of the relevant factors into account, we are maintaining our full-year earnings guidance range of $1.79 to $1.89 per share.”

For the first two quarters of fiscal 2012, Hormel recorded net income of $256,282,000, or 97c per share, and comparable to the same period during the previous year when net income was $258,405,000, or 97c per share.

Sales for the first 26 weeks of fiscal 2012 rose to $4,052,298,000 from $3,880,599,000 during fiscal 2011.

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