Hormel Foods 1st-quarter profit climbs; raises full-year guidance

Hormel 1Q profit rises; lifts full-year outlook

PORTLAND, Ore. — Hormel Foods Corp. reported a tasty first quarter as shoppers continued to stock up on its food staples such as canned meats and Mexican food products.

The company boosted its full-year earnings expectations following the better-than-expected results. Shares rose Thursday.

Hormel and other food makers have benefited in the weak economy as consumers began to eat at home more to save money. Sales of Hormel’s lower-priced foods like stews have risen during the recession, but pricier items, such as microwave meals, have proven a tougher sell.

The maker of Spam, Dinty Moore stew and other foods reported that its profit 37 percent to $111.2 million, or 82 cents per share, for the quarter. It reported a profit of $81.4 million, or 60 cents per share, in the same quarter last year.

The performance easily beat the expectations of analysts surveyed by Thomson Reuters, who expected a smaller profit of 68 cents per share.

Sales climbed 2 percent to $1.73 billion, beating analyst’s $1.67 billion expectations.

Hormel posted sales gains in its grocery products, Jennie-O and specialty foods segments and said margins improved in several of its segments.

The grocery products unit, which makes up 15 percent of Hormel’s sales, saw revenue rise 8 percent on the strength of core products like Dinty Moore stew, Spam products and the company’s namesake chili. At Jennie-O Turkey Store, revenue grew 5 percent on higher whole bird sales and improved commodity meat prices. Specialty foods sales also rose 5 percent on increased contract manufacturing and sugar substitute sales.

However, revenue for its refrigerated foods division — which makes up 52 percent of its total sales — dipped slightly due to weaker sales to the food-service industry and lessened demand for ham, bacon and commodity pork.

Hormel is also trying to expand its product offerings, announcing earlier this month that it is acquiring the Shedd’s Country Crock chilled side-dish line from Unilever United States Inc., a move that adds potato and pasta side dishes to its entree-focused product line.

Jeff Ettinger, CEO of Hormel, said the company expects more modest gains in subsequent quarters due to higher hog costs and other factors. The company plans to increase spending on advertising to drive sales growth.

Hormel now anticipates a full-year profit of $2.68 to $2.78 per share, which is better than its previous forecast for earnings in a range of $2.63 to $2.73 per share.

Analysts predict a profit of $2.66 per share for the year.

Shares of Hormel, based in Austin, Minn., rose $1.59, roughly 4 percent, to $42.18 in midmorning trading.

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AP Business Writer Michelle Chapman contributed to this report from New York.