Packaged food and meat products maker Hormel Foods Corp. (HRL: Quote) on Thursday reported a slight increase in profit for the first quarter on higher sales. Earnings per share were flat with last year but matched analysts' expectations, while revenues missed their estimates. Looking ahead, the company raised its earnings outlook for fiscal 2013.
Jeffrey Ettinger, chairman, president and CEO of Hormel Foods said, "In terms of operating profits, strong results by our Specialty Foods, Grocery Products and All Other (International) segments offset weaker results by our Jennie-O Turkey Store segment. Results in our Refrigerated Foods segment, while even with a year ago, were hindered by poor pork processing margins."
Austin, Minnesota-based Hormel Foods' net earnings for the first quarter were $129.72 million, up from $128.40 million in the prior-year quarter. Earnings per share were flat with last year at $0.48.
On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.48 per share for the fourth quarter. Analysts' estimate typically excludes one-time items.
Net sales for the quarter increased 4 percent to $2.12 billion from $2.04 billion in the same quarter last year, but missed analysts' consensus estimate of $2.14 billion. Sales volumes for the quarter increased 2 percent from last year.
Hormel Foods' largest segment - refrigerated foods, recorded a 2 percent decline in sales to $1.06 billion or 50 percent of net sales, from the prior-year quarter. Operating profit was flat with last year, with volume down 2 percent.
Sales for the Jennie-O Turkey store totaled $390.33 million or 18 percent of net sales, a 3 percent increase from the same quarter last year. Operating profit at the segment declined 23 percent, while sales volume was even with last year.
Grocery products sales increased 24 percent to $334.14 million, or 16 percent of net sales, from the year-ago quarter. Segment's operating profit rose 13 percent and volume increased 4 percent.
Sales for specialty foods totaled $233.85 million or 11 percent of net sales, up 7 percent from the prior-year quarter. Operating profit grew 43 percent, with a volume increase of 1 percent.
All other segment, including the international business unit, contributed sales of $94.52 million, or 5 percent of net sales, 4 percent higher than the year-ago quarter. Operating profit was up 37 percent, and sales volumes were up 5 percent.
Total segment operating profit edged down to $203.52 million from $203.72 million in the year-ago quarter.
Effective February 15, Hormel Foods paid its 338th consecutive quarterly dividend, at the annual rate of $0.68.
Looking ahead to fiscal 2013, Hormel Foods raised its earnings outlook to a range of $1.93 to $2.03 per share from the prior range of $1.90 to $2.00 per share. Street is currently looking for full-year earnings of $1.96 per share.
Ettinger said, "Our Refrigerated Foods segment is presently facing weaker pork operating margins and challenges in live hog production operations, though we expect those factors to slowly improve. Our Jennie-O Turkey Store segment will post weaker results in comparison to last year's record year. We expect these challenges to continue in the near term and gradually diminish thereafter."
The company continue to expect modest accretion from Skippy acquisition in 2013, however, one-time transaction and transition costs on the acquisition will be down in the second quarter.
Hormel said in early January that it has agreed to buy the Skippy peanut butter business from Unilever United States Inc., a unit of consumer goods giant Unilever plc (UL, ULVR.L, UN), for about $700 million in cash. The transaction is expected to close early in 2013.
HRL closed Wednesday's trading at $36.12, down $0.42 on a volume of 1.08 million shares.
by RTT Staff Writer
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