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In May, the manufacturer and marketer of consumer-branded meat products announced its second-quarter earnings, and the news was positive. Stronger commodity prices and better sales of deli meats helped contribute to a 41 percent increase in earnings during the second quarter, ended May 1, on a US GAAP basis from net earnings a year earlier. The company had earnings of $109,579,000, equal to 40 cents per share on the common stock, which compared with income of $77,862,000, or 29 cents per share, during the same quarter of the previous year. Sales for the quarter were $1,959,041,000, up 15 percent from $1,699,782,000.
“Earnings growth was led by our Refrigerated Foods and Jennie-O Turkey Store segments, both of which had a strong quarter,” said Jeffrey Ettinger, chairman, president and CEO. “We are also gratified to attain sales growth in all five of our segments. Our Refrigerated Foods segment generated excellent results, benefiting from strong pork operating margins, and our Jennie-O Turkey Store segment delivered another outstanding quarter.”
The company had gotten off to a good start in the first quarter of the fiscal year after a stellar year in 2010. Hormel reported net earnings of $148.8 million, up 34 percent from earnings of $111.2 million a year earlier. Sales were up 11 percent, totaling $1.92 billion.
Jennie-O Turkey Store operating profit was also up a whopping 122 percent with dollar sales up 14 percent in the first quarter.
Hormel’s refrigerated foods segment also had a strong first quarter, with segment operating profit 37 percent greater than last year, as favorable spreads between hog costs and primal values bolstered the segment, the company said. Sales grew 13 percent during the quarter.
“Given our strong results in the second quarter, we are raising our full-year guidance range to $1.67 to $1.73 per share from $1.62 to $1.68 per share,” Ettinger said.
Sustaining momentum
Hormel is coming off a solid fiscal 2010. Net earnings were $409 million on sales of $7.2 billion, up 11 percent from 2009.
“We hit the $7 billion mark in annual sales for the first time in our company’s history, fueled by sales growth across all five of our segments,” Ettinger said in November.
Following its record sales, Hormel distributed its largest annual profit sharing of more than $16.3 million to eligible hourly and salaried employees. In November, Hormel announced its 45th consecutive annual dividend increase.
In March, Hormel, known for its philanthropy, introduced a fortified shelf-stable turkey spread to help address childhood malnutrition throughout the world. The high-protein product, called Spammy, was created to help serve malnourished and poverty-stricken communities worldwide. Hormel made a three-year commitment to deliver 1 million cans of Spammy to in-need families in Guatemala through partners Food For The Poor and Caritas Arquidiocesana in 2011.
In May, the company released its fourth full report covering environmental and social performance and the fifth report highlighting the company’s commitment to being a good corporate citizen. This year’s report details the company’s performance in fiscal year 2010 to reduce water use and solid waste going to landfill, as well as strategic philanthropic efforts and employee safety performance.
Hormel said that it had achieved its water-use goal one year early, reducing water use by 30 million gallons since 2009.
Last month, Hormel’s stock hit a new 52-week high, trading at $29.54. Shares were up more than 13 percent for the year at the time.
Aylward is a freelance writer from Cleveland.
