Hormel Foods Corporation (HRL 26.75, -0.59, -2.16%) reported its performance for the fiscal year 2011 first quarter.
All comparisons are to the first quarter of fiscal 2010. All per share results reported here are on a two-for-one stock split adjusted basis.
Diluted EPS of $.55, up 34 percent from $.41 per share Segment operating profit up 33 percent Dollar sales of $1.9 billion up 11 percent Volume up 4 percent Jennie-O Turkey Store operating profit up 122 percent; volume up 5 percent; dollar sales up 14 percent Refrigerated Foods operating profit up 37 percent; volume up 2 percent; dollar sales up 13 percent Grocery Products operating profit down 10 percent; volume up 5 percent; dollar sales up 6 percent Specialty Foods operating profit down 12 percent; volume up 7 percent; dollar sales up 2 percent All Other operating profit up 29 percent; volume up 8 percent; dollar sales up 17 percent
The company reported fiscal 2011 first quarter net earnings of $148.8 million, up 34 percent from earnings of $111.2 million a year earlier. Diluted earnings per share for the quarter were $.55 this year compared to $.41 per share last year. Sales totaled $1.92 billion, which was up 11 percent from fiscal 2010.
"We are pleased to report double-digit increases in both sales and earnings for the quarter. All five segments generated year-over-year sales growth. Earnings growth was led by excellent performance by our Jennie-O Turkey Store and Refrigerated Foods segments," said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer.
"Our Jennie-O Turkey Store segment had an outstanding quarter, driven by favorable commodity meat margins and improved efficiencies across the entire supply chain and operations. It also experienced improved sales of value-added products. Our Refrigerated Foods segment had a strong quarter, as well, benefiting from continued high pork operating margins. We were pleased by the performance of our international business in the All Other segment, too. Both our Grocery Products and Specialty Foods segments were pressured by higher commodity input costs during the quarter," remarked Ettinger.
SEGMENT OPERATING SUMMARIES—FIRST QUARTER
Grocery Products (14% of Net Sales, 20% of Total Segment Operating Profit) The Grocery Products segment operating profit declined 10 percent, due primarily to higher raw material costs. Sales grew 6 percent, led by higher sales of the SPAM(R) family of products, Hormel(R) chili, Hormel(R) flavored bits and Hormel(R) Mary Kitchen(R) hash, and strong sales growth of the MegaMex Foods franchise.
Refrigerated Foods (53% of Net Sales, 39% of Total Segment Operating Profit) The Refrigerated Foods segment had a strong first quarter, with segment operating profit 37 percent greater than last year, as favorable spreads between hog costs and primal values benefited the segment. Sales grew 13 percent during the quarter, featuring higher sales of Hormel(R) party trays, Hormel(R) pepperoni, Hormel(R) refrigerated entrees, Hormel(R) Always Tender(R) flavored meats, and aided by the inclusion of Hormel(R) Country Crock(R) side dishes.
Jennie-O Turkey Store (19% of Net Sales, 30% of Total Segment Operating Profit) Jennie-O Turkey Store had an outstanding quarter, with segment operating profit up 122 percent. Better commodity meat prices and improved efficiencies in the supply chain and operations helped drive results. Sales grew 14 percent for this segment with increased commodity meat and value-added sales, featuring increased sales of Jennie-O Turkey Store(R) turkey burgers, turkey bacon and fresh tray pack items.
Specialty Foods (10% of Net Sales, 7% of Total Segment Operating Profit) Segment operating profit for Specialty Foods declined 12 percent, due primarily to higher raw material costs. Sales grew 2 percent, as higher sales of sugar and blended products were partially offset by lower sales of contract manufacturing and sugar substitute products.
All Other (4% of Net Sales, 4% of Total Segment Operating Profit) Segment operating profits for the All Other segment, which consists primarily of Hormel Foods International, increased 29 percent for the quarter, while sales grew 17 percent, led primarily by stronger exports of fresh pork and the SPAM(R) family of products.
Net Interest and Investment Income Net interest and investment expense was flat with a year ago.
General Corporate Expense General corporate expenses were higher than last year due to expenses associated with the vesting of options under the Universal Stock Option award granted to all employees in 2007.
"Due to our strong results in the first quarter, we are raising our full year guidance range from $1.55 to $1.60 per share to $1.62 to $1.68 per share. We expect to see higher input costs the balance of the year, and our team will continue to tackle the challenge of offsetting these added costs with pricing and efficiency gains. Nevertheless, we believe our strong portfolio of branded products and our balanced model should allow us to build upon the momentum of our excellent start," concluded Ettinger.
Effective February 15, 2011, the Company paid its 330th consecutive quarterly dividend, at the annual rate of $.51.
The Company's webcast can be accessed from www.hormelfoods.com.
About Hormal Foods Corporation
Hormel Foods Corporation, based in Austin, Minn., is a multinational manufacturer and marketer of consumer-branded food and meat products, many of which are among the best known and trusted in the food industry. The company leverages its extensive expertise, innovation and high competencies in pork and turkey processing and marketing to bring branded, value-added products to the global marketplace. The company is a member of the Standard & Poor's 500 Index, Dow Jones Sustainability Indexes, Maplecroft Climate Innovation Indexes, Global 1000 Sustainable Performance Leaders and was named one of "The 100 Most Trustworthy Companies" by Forbes in 2010. The company enjoys a strong reputation among consumers, retail grocers, foodservice and industrial customers for products highly regarded for quality, taste, nutrition, convenience and value. For more information, visit www.hormelfoods.com.