August 21, 2009

Hormel Foods Corp., the maker of Spam luncheon meat and Jennie-O turkey, said fiscal third- quarter profit rose 49 percent due to lower costs for hogs and feed.

According to Austin, Minnesota-based Hormel, net income climbed to US$77.2 million, or 57 cents a share, in the three months ended July 26, from US$51.9 million, or 38 cents, a year earlier, while sales fell 6.2 percent to US$1.57 billion.

Hormel chief executive officer Jeffrey Ettinger last week boosted Hormel's full-year profit forecast, citing improving results in three divisions. The falling price of corn, a feed ingredient for turkeys, benefited Hormel, which cut the number of the birds it raises last year. Hog and wholesale pork prices fell to six- year lows this week as some countries restricted US shipments after the swine flu outbreak in April.

Hormel rose 37 cents, or 1 percent, to US$37.61 in the New York Stock Exchange composite trading. The shares increased 20 percent this year through on Wednesday (Aug 19).

Operating profit from refrigerated foods, which includes party trays and pizza toppings, surged 60 percent to US$58.3 million.

The average price of wholesale pork during the three months through July was 58.46 cents a pound, down from 80.06 cents a year earlier.

Operating profit at the Jennie-O Turkey unit almost doubled from a year earlier to US$15.9 million due to lower spending on feed after the company cut the number of birds it raises by about 5 percent. Hormel is the second-largest US turkey processor after Smithfield Foods Inc.

Corn, a feed ingredient, plunged 56 percent through July from a record US$7.9925 a bushel on June 27, 2008, while soy slumped 40 percent from a record US$16.3675 a bushel on July 3, 2008.

Ettinger said profit from the grocery-products unit, which includes Hormel chili and Spam, rose 11 percent to US$33.2 million as increased sales of canned food more than offset the impact of discontinued sales of olive oil and "soft sales" in microwavable meals.

Hormel on Aug. 10 boosted its forecast for the 12 months through October to US$2.36 to $2.42 a share, saying results were helped by the performance of the refrigerated-foods unit, the Jennie-O Turkey segment and the grocery-products division.