February 25, 2013

Hormel's first quarter 2013 results showed "solid top-line momentum" with overall sales up 4% in value to US$2.1 billion and increased 2% in volume compared to the first quarter of 2012.

Among the highlights of Hormel Foods Corporation's fiscal year 2013 first quarter report are segment operating profits even with the same period of last year. Diluted earnings per share (EPS) were US$0.48, even with last year.

Weaker results were delivered by Jennie-O Turkey Store and Refrigerated Foods, which was hit by poor pork processing margins, while results were boosted by strong pork export growth.

Grocery Products operating profit was up 13% and volume up 20% (volume up 4% excluding sales of Don Miguel products); dollar sales were up 24% (up 4% excluding sales of Don Miguel products). Refrigerated Foods' operating profit was even with last year; volume and dollar sales were each down 2%.

Jennie-O Turkey Store's operating profit was 23% lower; while volume was even with last year, dollar sales were up 3%. Specialty Foods' operating profit was up 43%; volume was up by 1% and dollar value by 7%. All Other (International) operating profit was up 37%; volume was 5% higher and dollar sales were up by 4%.

The company reported fiscal 2013 first quarter net earnings of US$129.7 million, up 1% from earnings of US$128.4 million a year earlier. Diluted earnings per share for the quarter were US$0.48 this year, even with last year. Sales totalled US$2.1 billion, which was up 4% on-year.

Jeffrey M. Ettinger, chairman of the board, president and chief executive officer, commented, "We continue to generate solid top-line momentum with many of our franchises, as our broad portfolio of value-added products resonates with consumers. In terms of operating profits, strong results by our Specialty Foods, Grocery Products and All Other (International) segments offset weaker results by our Jennie-O Turkey Store segment. Results in our Refrigerated Foods segment, while even with a year ago, were hindered by poor pork processing margins. Overall, earnings per share of $0.48 during the quarter were consistent with our expectations for the start of fiscal 2013."

The All Other segment, which consists primarily of Hormel Foods International, posted segment profits that were up a strong 37% on sales growth of 4%. Results were primarily driven by higher fresh pork exports and better results by our operations in China.

Several factors affected general corporate expense which, in aggregate, resulted in lower expenses. No single factor was material in relationship to the total expenses incurred in the quarter.

Ettinger commented: "We are pleased with the growth being demonstrated by our Grocery Products, Specialty Foods and All Other (International) segments, and anticipate continued success going forward. Our Refrigerated Foods segment is presently facing weaker pork operating margins and challenges in live hog production operations, though we expect those factors to slowly improve. Our Jennie-O Turkey Store segment will post weaker results in comparison to last year's record year. We expect these challenges to continue in the near term and gradually diminish thereafter. We continue to expect modest accretion from the SKIPPY acquisition in fiscal 2013, but note that one-time transaction and transition costs related to the acquisition will fall primarily in our second quarter. Taking all of these factors into account, we are raising our full-year guidance to US$1.93 to US$2.03 per share from US$1.90 to US$2.00 per share."