May 29, 2012
Hormel's Q2 net earnings up 17%
For the second quarter of 2012, Hormel Foods has reported net earnings of US$127.9 million, up 17% from US$109.6 million a year earlier.
For the six months ended April 29, 2012, net earnings were US$256.3 million, down 1% from net earnings of US$258.4 million the same period last year. Diluted net earnings per share for the six months ended April 29, 2012 were US$0.95, equal to diluted net earnings per share of US$0.95 last year.
Sales for the quarter were US$2 billion, up 3% from fiscal 2011. For the six months ended April 29, 2012, sales totalled US$4.1 billion, up 4% from the same period last year.
"We are pleased to report record earnings and sales for the second quarter. This is a good example of our balanced business model in action, as we were able to increase earnings in four out of five segments." said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer.
"Sales grew 3%, again with four of our five segments registering gains."
"Our Jennie-O Turkey Store segment delivered another outstanding quarter, driven by value-added sales growth. Our International business also achieved impressive results, led by strong export sales. Both our Grocery Products and Specialty Foods segments returned to earnings growth during the quarter. Results of our Refrigerated Foods segment were significantly pressured by lower pork operating margins," Ettinger remarked.
"We are particularly encouraged by the continued growth of our Jennie-O Turkey Store value-added sales and our MegaMex Foods joint venture," Ettinger stated.
The Grocery Products segment operating profit increased 10%, aided by lower pork and beef input costs. Net sales exceeded last year by 1%. Strong results by our SPAM® family of products and our MegaMex Foods products offset soft sales of our microwave products and DINTY MOORE® stew.
Refrigerated Foods segment profit declined 25%, due primarily to lower pork operating margins during the quarter.
Net sales for the quarter declined one per cent, with lower commodity pork sales offsetting strong sales of HORMEL® NATURAL CHOICE® deli meats, HORMEL® party trays, HORMEL® pepperoni and DILUSSO® deli products. Foodservice value-added sales also grew during the quarter.
Jennie-O Turkey Store had another excellent quarter, with segment operating profit up 50% from a year ago, driven by value-added sales. Net sales for the quarter rose 7%, led by sales of JENNIE-O TURKEY STORE® retail tray pack and turkey burgers.
The Specialty Foods segment operating profit increased 9%, as pricing actions taken earlier helped offset higher raw material costs. Net sales grew 12%, led by sales of private label canned meats, ingredients, bulk and nutritional items.
The All Other segment, which consists primarily of Hormel Foods International, grew segment profit 52%, and grew net sales by 11%, driven by stronger exports of fresh pork and the SPAM® family of products.
General corporate expenses were lower than last year due primarily to lower pension and insurance costs.
"Our second quarter results provide positive momentum heading into the back half of the year. We believe continued weaker pork operating margins will be more than offset by stronger results from our other segments. We expect sales in the centre of the store to slowly improve as we continue our advertising support of our HORMEL® and SPAM® brands. Taking all of the relevant factors into account, we are maintaining our full-year earnings guidance range of US$1.79-1.89 per share," Ettinger concluded.
