Hormel Foods reported higher third-quarter profits and raised its full-year outlook despite a near-50% reduction in earnings at its Jennie-O Turkey business due to the impact of avian influenza.
The US company said group operating profit rose 5.3% to US$236.6m in the period to 26 July. Profit growth was propelled by a near 80% increase in earnings at its speciality foods business as well as a near-60% rise in operating profit at its grocery division. These gains offset a 45.4% reduction in Jennie-O profits, which Hormel attributed to the negative impact of the bird flu outbreak that has swept the US in recent months.
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"Our balanced business model prevailed once again this quarter, as we were able to overcome the significant challenge of avian influenza in our Jennie-O Turkey Store segment to deliver record earnings and volume sales," said Jeffrey Ettinger, chairman, president and CEO. "Grocery products drove earnings growth with favourable input costs and increased sales of Hormel chili and Skippy peanut butter. Specialty foods also delivered excellent results, as the team continues to increase sales of Muscle Milk protein nutrition products and improve the cost structure and synergies between our CytoSport and Century Foods businesses."
Net earnings in the 13 weeks to 26 July totalled $228.2m, versus $212.9m last year. Hormel raised its outlook for full-year EPS to a range of $2.57-2.63 per share, up from our previously stated guidance range of $2.50-2.60.
While the Spam-to-Natural Choice maker grew profits in the period, group sales were down 4.2%. The drop was driven by a lower revenue contribution from Hormel's Jennie-O, refrigerated and international segments. Both grocery and speciality product sales increased in the three months.
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