Hormel shares dropped despite Q3 profits

Hormel shares dropped despite Q3 profits

Shares in Hormel Foods dropped despite today's announcement (25 August) of an increase in third-quarter profits and an improved forecast for annual earnings.

As of 11.41 ET, shares in the US company, which makes Spam and owns the Jennie-O turkey business, were down nearly 5.5%.

The fall in its stock came despite third-quarter operating profit of US$148m, compared to $145m in the same period last year. Net profit was $99.9m, compared to $86.3m a year earlier.

Hormel also increased dollar sales 10% to $1.9bn in the period up to 31 July but volumes were flat.

Chairman, president and CEO Jeffrey Ettinger said: "Earnings growth was led by our Grocery Products and Jennie-O Turkey Store segments, both of which had a strong quarter. Our international business in our All Other segment was also a strong contributor to our earnings results."

Ettinger added: "Lower pork operating margins hindered our Refrigerated Foods segment results and our Specialty Foods segment was pressured by higher than expected raw material costs during the quarter."

However, commenting on the outlook for the rest of the year, Ettinger added: "As a result of our solid results in the third quarter, we are raising our full-year guidance range to $1.70 to $1.75 per share from $1.67 to $1.73 per share."