Higher meat costs crimp Hormel earnings

by Staff
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AUSTIN, MINN. — Higher meat costs in the grocery segment and charges contributed to a 3% decline in income during the second quarter for Hormel Foods Corp.

For the quarter ended April 25, the company had earnings of $77,862,000, equal to 58c per share on the common stock, which compared with income of $80,385,000, or 60c per share, during the same quarter of the previous year. Sales for the quarter were $1,699,782,000, up 7% from $1,595,043,000 during the same quarter of the previous year.

Also during the quarter were one-time charges relating to the Valley Fresh plant closing and the tax impact of the new health care laws.

“This quarter demonstrated the value of our balanced model as our Jennie-O Turkey Store and Specialty Foods segments more than made up for the more difficult quarter experienced by our Grocery Products segment due to increased raw material costs,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “We are also gratified to see our sales grow in all five of our segments. Our Jennie-O Turkey Store segment had an outstanding quarter, showing strength across the board. Our Specialty Foods segment also enjoyed a strong quarter, aided by strong sales of nutritional products, sugar substitutes and private label canned meats. Our Refrigerated Foods segment had improved results, primarily resulting from strong cutout margins, and our International segment had weaker results.”

The Grocery Products segment had an operating profit of $33,022,000, down 24% from $43,677,000 during the same quarter of the previous year. Sales for the segment were $256,665,000, up 6% from $241,684,000 during the same quarter of the previous year.

Operating profit for the Jennie-O Turkey Store was $32,169,000, up 93% from $16,678,000 during the same quarter of the previous year. Sales for the segment were $292,551,000, up 1% from $289,745,000 during the same quarter of the previous year.

For the six months ended April 25, the company had earnings of $189,069,000, or $1.42 per share, up 17% from $161,768,000, or $1.20 per share, during the same period of the previous year. Sales for the quarter were $3,427,229,000, up 4% from $3,284,129,000 during the same period of the previous year.

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