Hormel Foods Net Profit Falls 14% on Costs

“Our first quarter earnings of 48 cents per share was the second best in our Company's history, albeit down from a year ago,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “Sales grew six percent, with four of our five segments registering sales gains in the quarter.”

Feb 24 2012 --- Hormel Foods Corporation has reported fiscal 2012 first quarter net earnings of $128.4 million, down 14 percent from earnings of $148.8 million a year earlier. Diluted earnings per share for the quarter were $.48 this year compared to $.55 per share last year. Sales totaled $2.04 billion, which was up 6 percent from fiscal 2011.

“Our first quarter earnings of 48 cents per share was the second best in our Company's history, albeit down from a year ago,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer.  “Sales grew six percent, with four of our five segments registering sales gains in the quarter.”

“I was pleased with the strong results achieved by our Jennie-O Turkey Store segment, led by increased retail value-added sales. Our International business also delivered a solid quarter, fueled by strong export sales. Results of our Refrigerated Foods segment were hindered by significantly lower pork operating margins, and our Grocery Products segment results were adversely impacted by softer sales in the center of the store,” commented Ettinger.

“We are encouraged by continued growth of our MegaMex Foods joint venture, led by increased sales of our Don Miguel products and our Wholly Guacamole line. Our Foodservice group also achieved solid sales growth during the quarter,” stated Ettinger.

The Grocery Products segment operating profit declined 9 percent, due primarily to lower volumes and higher raw material costs.  Sales fell 3 percent with overall softer results partially offset by sales growth of the MegaMex Foods joint venture.

Refrigerated Foods segment profit declined 44 percent, due primarily to lower pork operating margins.  Sales grew 7 percent during the quarter, led by sales of Hormel pepperoni, Hormel Country Crock side dishes, and Hormel Natural Choice deli meats in the Meat Products group, and by sales of our Hormel Natural Choice deli meats, Austin Blues barbecue products, and Cafe H ethnic products in the Foodservice group.

Jennie-O Turkey Store had an outstanding quarter, with segment operating profit up 4 percent, over a very strong quarter a year ago.  Sales grew 4 percent led by sales of Jennie-O Turkey Store retail fresh tray pack items and turkey burgers.

Segment operating profit for Specialty Foods declined 4 percent, due primarily to higher raw material and freight costs.  Sales grew 14 percent, led by sales of nutritional products, private label products, sugar, and liquid portions.

Segment operating profit for the All Other segment, which consists primarily of Hormel Foods International, increased 25 percent for the quarter, while sales grew 17 percent, led primarily by stronger exports of fresh pork and the SPAM family of products.