Hormel Foods Q1'09 net earnings down 8 percent on-year

Hormel Foods has reported fiscal 2009 first quarter net earnings of US$81.4 million, down 8 percent from earnings of US$88.2 million a year earlier. 

Sales totalled US$1.69 billion, up from US$1.62 billion in fiscal 2008.

Jeffrey M. Ettinger, chairman of the board, president and chief executive officer, said, ''Our Refrigerated Foods segment experienced a difficult quarter. Higher than anticipated hog costs, combined with weaker than expected primal markets, led to losses in our pork operations that we were not able to offset, despite a strong performance by our meat products group. Our Specialty Foods and All Other segments also had weaker results.''

Ettinger said changes in consumer behaviour resulting from the recession had a mixed effect on sales, as retail products such as Hormel's traditional franchises had increased while sales of some of the company's newer convenience items had dropped.

In general, overall retail sales have been relatively strong while foodservice sales showed weakness, Ettinger said.

The All Other segment, which includes Hormel Foods International, experienced a 9-percent decrease in operating profit for the quarter. Strong sales from exports of fresh pork and the SPAM family of products were unable to fully offset the negative impact of the strengthening US dollar and weaker results experienced by Hormel's joint ventures.

A US$1.7 million gain in the rabbi trust investments significantly improved net interest and investment income for the quarter versus last year. General corporate expenses for the first quarter were 18-percent lower than last year, due to lower net compensation, pension and insurance expenses.

''We are reconfirming our fiscal 2009 guidance of US$2.15 - US$2.25 per share. Although we are on track to meet our goal, we recognise there could be continued challenges to our business as a result of the turbulent economy. We believe our strong consumer franchises, with many good value offerings, and our strong management team should allow us to meet our goals,'' concluded Ettinger.

Hormel Foods Corporation, based in Austin, Minnesota, is a multinational manufacturer and marketer of consumer-branded food and meat products.