HRL 2009 Q2 Earnings

Before the opening bell on Thursday May 21, Hormel Foods Corp. (HRL), a multinational manufacturer and marketer of consumer-branded meat and food products, made it known that the company’s 2Q profits advanced marginally, but still managed to come in ahead of market expectations. The recent quarter’s increase in earnings was attributed to consumers watching their budgets when shopping for groceries.

During the period, Hormel recorded net income of $80.4M, or $0.59 per share, in contrast to the previous year’s 2Q profit of $77.6M, or $0.56 per share, an increase in earnings of just under 4%. As customers continue to bargain hunt, they tended to gravitate towards bargain items in order to battle the economic crunch. Many of today’s shoppers have either traded down or reduced the number of pricy food items.

"We have seen a continuation of some of the same trends we saw in the first quarter, as consumers seek value in retail channels while foodservice sales remain soft," affirmed Jeffrey M. Ettinger, Chairman, President and CEO at Hormel.

As for the company’s quarterly sales figures, Hormel posted overall revenues of $1.6B, up marginally from the prior year’s sales totals of $1.59B. Within the company’s grocery product division, which includes such products as Dinty Moore and SPAM, total sales increased 4% for the quarter. Net sales for the unit came in at $241.68M.

“Our Grocery Products segment again delivered increases in sales and segment profit, with strong sales of canned meats and Mexican products. Our Jennie-O Turkey Store segment continues to rebound, despite difficult market conditions, as they were faced with even lower commodity meat prices than in the first quarter," added Ettinger.

On average, analysts within the industry were looking for Hormel to record quarterly earnings of $0.50 per share on total revenues of $1.68B. Analysts typically exclude any one-time charges in their estimates.

Looking towards another segment within the company, Hormel’s operating profits from their Jenny-O Turkey Stores (JOTS) skyrocketed 42% during the period as lower feed costs for turkeys helped the bottom-line. The company also confirmed that lower turkey production aided in Hormel’s market exposure, allowing them to reduce prices and sell more volume.

Hormel’s refrigerated foods unit witnessed its operating profits slip more than 7% as foodservice and supermarket sales slowed. "Our refrigerated foods segment experienced another difficult quarter, as continued weak cut-out margins led to losses in our pork operations," Ettinger went on to explain.

Within the company’s specialty foods division, sales dropped nearly 5% to total $173.59M. Meanwhile, operating profits within the segment slipped half a percent to total $15.43M. Despite an overall increase in sales of sugar substitutes and private label canned Hormel products, the decrease in sales from nutritional and ready-to-drink mixes more than offset the gains from other product sales.

Having completed the first half of fiscal 2009, Hormel posted net earnings of $161.77M, or $1.20 per share, compared to the previous year’s six-month tally of $165.74M, or $1.20 per share, a decrease in net income of 2.4%. Overall sales for the period came in at $3.28B, up 2.1% from the prior year’s total of $3.22B for the first two quarters of the year.

Looking ahead, Hormel, after a solid earnings report for the first half of 2009, is looking to post yearly earnings in the upper portion of their previously stated range of $2.15 to $2.25 per share. Meanwhile, analysts are looking for the company to book annual earnings of $2.24 per share.

By the conclusion of Thursday’s trading session, shares of Hormel was trading higher, up more than 2%, or $0.70, to end the day at $33.65 per share. Throughout the year, shares of HRL have traded as high as $41.72 and as low as $24.81 per share.

By BetterTrades