Hormel reports slight slip in earnings

HORMEL Foods Corp. has reported earnings for its fiscal 2013 second quarter that were modestly lower than the year-before quarter as decreased income at Jennie-O Turkey Store offset strong performance in its grocery products segment.

The company said earnings were also affected by non-recurring costs related to its acquisition of the Skippy peanut butter business.

Hormel's results are shown in the Tables.

For its grocery products segment, Hormel said operating earnings increased 10% due to the addition of the Don Miguel and Skippy products and sales of Chi-Chi's Mexican, Spam, Dinty Moore and Mary Kitchen products. The company said growth in its line of Hormel Compleats microwave meals was supported by the introduction of cheesy pasta items.

For its refrigerated products segment, which includes fresh pork, Hormel said operating income increased 3% even though sales slipped 2%, with higher costs for grain in its swine operations offset by improved results in other parts of the segment. The company said results for value-added products such as convenience bacon and party trays led retail store performance.

The company said it anticipates an improved cost and price situation in its pork business in the second half of the year.

For Jennie-O Turkey Store, Hormel said operating profit declined 26% and sales slipped 2% as increased sales of value-added products were insufficient to offset higher costs for grain and pricing that was held back by weaker commodity turkey prices. The company said sales were led in both the foodservice and retail channels by fresh tray pack turkey and turkey bacon.

Hormel said it expects its turkey business to "turn the corner" as grain prices and pressure from commodity turkey prices begin to moderate in the second half of the year.

For its international segment, Hormel said it posted a 21% increase in both operating profit and sales due to fresh pork exports and sales in its Spam line of products, as well as improved results from its operations in China.

For its specialty products segment, Hormel said results were supported by beverages, ingredients, nutritional products and sugar.

The company said specialty products will be challenged in the second half of the year by the June 30 expiration of its contract with Diamond Crystal Brands for Hormel to sell Splenda in the foodservice channel.

Hormel also announced that its board of directors has authorized a cash dividend of 17 cents per share on the company's common stock, payable Aug. 15 to holders of record on July 22. The company said the payment will be its 340th consecutive quarterly dividend.

Hormel, headquartered in Austin, Minn., manufactures and markets consumer-branded food products, including meat products, around the world. The company reported fiscal 2012 sales that totaled $8.2 billion.

Volume:85 Issue:23