US food manufacturer Hormel Foods has reported a 63% rise in quarterly earnings, but said higher grain prices had impacted its results.
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The company, which makes branded meat and food products, posted net earnings of US$56.3m, or 40 cents per share, for the third quarter to 24 July, compared to $34.7m, or 25 cents per share, a year earlier. Earnings in the latest quarter included an after-tax gain of $11.5m from the sale of Vista International Packaging.
Sales totalled $1.2bn, up from $1.0bn in the same period last year, while volume rose 6% compared to last year.
“Earnings per share for the quarter from on-going operations improved by 28% over last year,” said chairman and CEO Joel Johnson.
“Even though we reported significant improvement over last year, higher grain prices substantially increased our cost of goods, particularly in our turkey operation. Because of this higher cost, we were not able to deliver the level of operating profit margin we had hoped for,” Johnson added.
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By GlobalDataBoth Hormel Foods and Jennie-O Turkey Store Foodservice business units delivered strong quarterly results, with dollar sales up 19% and 27% respectively, the company said. Products contributing double-digit growth included Hormel bacon, Austin Blues BBQ products, Hormel Always Tender pork and Jennie-O Turkey Store oven roasted and pre-sliced products.
Hormel said Jennie-O Turkey Store delivered much better returns than last year because of the growth in sales of value-added products, better commodity meat markets and improved efficiencies. Dollar sales of value-added products were 17% ahead of last year.
However, Johnson said operating profit and volume loss in the company’s grocery products division was a disappointment.
“We continue to evaluate areas that are not meeting expectations and we are making adjustments. We continue to feel pressure from higher pork and beef raw material costs but benefited from improved volume results reported from ethnic items and the Spam family of products,” he said, adding that price increases had also benefited results.
