Hormel Foods reports 13% increase in Q3 net earnings

US-based Hormel Foods has reported that its net earnings for the third quarter increased 13% to $111.2m, compared to $98.5m in 2011, due to strong performance of its grocery products unit.

Sales for the quarter, which ended 29 July 2012, increased 5% to $2bn, up from $1.91bn in 2011.

Hormel Foods chairman of the board, president and CEO Jeffrey M Ettinger said that all the five segments of the company posted increased earnings, driven by the grocery products segment.

"Our strong sales growth across multiple segments demonstrates that our products are connecting well with consumers," Ettinger said.

Grocery products’ operating profit increased 31.6% to $40m, due to strong performance of the Spam brand, a canned, precooked meat product, while net sales rose 21.1% to $297.2m.

The refrigerated foods segment, which is the company’s largest business unit, posted 6.9% growth in operating profit to $60.75m, driven by strong results of meat products and food service businesses, while sales were flat at $1.043bn.

The Jennie-O Turkey store division, which sells turkey products, reported 12.2% increase in operating profit to $39.10m, due to increased value-added sales and an improved product mix, and net sales rose 7.3% to 351.60m.

In the Specialty Foods division, profit surged 18.5% to $21.40m and net sales increased 11.1% to $230.07m, due to higher sales of private label canned meats, bulk and nutritional items, and ingredients.

The All Other segment, which primarily includes Hormel Foods International, reported a 54.6% jump in profit to 12.43m, and a 1.8% increase in sales to $86.02m, due to high exports of Spam family of products and fresh pork.

In nine months, the company’s net earnings increased 3% to $367.4m, and sales rose 5% to $6.1bn.

The company noted that while increasing grain costs due to a persistent drought may affect the full-year results, it is on track to achieve its full-year earnings forecast of $1.79 to $1.89 per share.