Hormel Foods Corporation, the multinational marketer of consumer-branded meat and food products, has reported fiscal 2006 first quarter net earnings of US$69.3m, up 7% from last year.
Diluted earnings per share for the quarter were $0.50 this year compared to $0.46 per share last year and sales totalled $1.4 billion, up from $1.3 billion in fiscal 2005.
Pretax earnings for the first quarter of fiscal 2006 included a $9.2 million charge ($.04 per share) for the adoption of SFAS 123(R) (Share-Based Payment) and a $7.3 million charge ($.03 per share) for expenses relating to non-qualified plan settlements due to executive retirements, the company said.
“We are off to a good start in fiscal 2006,” said Jeffrey M. Ettinger, president and chief executive officer. “The balanced strength of our business allowed us to deliver top and bottom line growth for the quarter, even though we faced considerably higher energy and freight costs. Continued strong performance from Jennie-O Turkey Store and significant improvement from the Specialty Foods segment were key drivers behind our solid first quarter results.”
Jennie-O Turkey Store benefited from high turkey meat markets, lower feed costs and value-added sales growth. While overall tonnage for the segment was lower due to planned reductions in harvest, value-added volume was up 9%. Sales dollars were up 2% despite a reduction in volume due to the higher markets and improved mix.
Refrigerated Foods delivered 3% higher operating profit driven by the contributions from last year’s acquisitions and growth in key categories.
The Grocery Products segment reported mixed results with higher sales but lower operating profits. Higher costs associated with beef and freight more than off-set the benefit received from lower pork input costs.
Specialty Foods reported improved results across all business units and delivered profitability at levels that are expected to continue, the company said.
Ettinger said: “Looking ahead, we believe that lower pork markets will benefit our value-added processed items in Refrigerated Foods and certain items in Grocery Products. On the flip side, cost factors that could pressure profitability are higher beef, freight and energy costs. Also, as expected, we are starting to see higher levels of egg sets and poultry placements in the turkey industry that we expect will result in more turkeys coming to market in the late summer/early fall.
“After assessing these factors, along with our expectation of continued success in growing our value-added portfolio, our GAAP earnings guidance for the second quarter of fiscal 2006 is in a range of $0.42 to $0.48 per share, up from $0.40 per share in Q2 of fiscal 2005. For the full year of fiscal 2006, we are increasing our GAAP earnings per share guidance from a range of $1.86 – $1.96 to a range of $1.90 – $2.00,” Ettinger said.