Hormel Foods Thursday reported first quarter profits that were in line with last year’s and with current Wall Street expectations, as strong sales of Spam, chili and other dry grocery goods were offset by weakness in the company’s Jennie-O turkey business.
The Austin-based packaged food company reported net earnings of $129.7 million or 48 cents per share compared to $128.4 million or 48 cents per share in last year’s fiscal first quarter. Stock analysts were looking for 48 cents per share on average.
Hormel’s quarterly sales tallied $2.1 billion, up 4 percent over a year ago and in line with analysts’ estimates. “We continue to generate solid top-line momentum with many of our franchises, as our broad portfolio of value-added products resonates with consumers,” Hormel CEO Jeffrey Ettinger said in a press release.
Despite expectations of continued relative weakness at Jennie-O, Hormel Thursday raised its full-year earnings guidance to $1.93 to $2.03 per share from $1.90 to $2.00 per share.
While Jennie-O sales rose 3 percent, its first quarter operating profits sunk 23 percent, pummeled by the high cost of grain — the key element in turkey feed — and weaker prices for non-branded or commodity turkey. Jennie-O comprises about 18 percent of Hormel’s sales, but 26 percent of operating profits.
Hormel’s grocery products division, which includes of a host of shelf-stable products, experienced a 13 percent boost in operating profit during the quarter while sales grew 24 percent. The grocery division makes up 16 percent of sales and 25 percent of operating profits.
Hormel’s refrigerated foods division, its largest segment by sales and home to fresh pork and other meats, had profits in line with last year and saw a 2 percent gain in revenues.
Strongly profitable quarters were also in order at Hormel’s smaller international operation — home to Spam exports — and its specialty foods division, which includes ingredients for other food makers and private label canned meats.
Hormel’s stock was at $36.84 in morning trading, up 72 cents or about 2 percent.