Published November 24, 2004
NEW YORK – Hormel Foods Corp. (HRL) Wednesday reported a quarterly profit that was little changed from a year earlier, but topped Wall Street's estimates by a penny as strong demand for pork and turkey offset higher expenses.
The maker of Spam luncheon meat and Jennie-O turkey (search) said earnings for the current fiscal first quarter ending in January could also beat analysts' forecasts as margins on products like sliced meats and fully cooked refrigerated entrees improve.
Net income in the fiscal fourth quarter ended Oct. 30 was $69.8 million, or 50 cents a share, compared with $70.4 million, or 50 cents a share a year earlier.
On Nov. 11, the company raised its profit forecast for the quarter to 48 to 50 cents a share from a prior estimate of a profit between 40 cents and 46 cents share. The analysts' average forecast was 49 cents a share, according to Reuters Estimates.
Hormel executives, speaking on a conference call with analysts, said that a slight easing of higher pork and beef raw material costs also aided profitability in the latest quarter.
The strong demand for pork and turkey products stemmed from consumers pursuing high-protein, low-carb diets like the Atkins weight-loss plan, Joel Johnson, Hormel chairman and chief executive officer, said in the conference call.
He said contrary to increasing media reports that the low-carb diet craze may be becoming less popular, consumers were "not walking away from protein. I don't think the Atkins diet has given us a hangover. We're still flying high."
"They (consumers) may be walking away from low-carbohydrate breads and pastas and things like that, they are not walking away from protein," Johnson said.
The company said quarterly sales grew 15 percent to $1.3 billion, driven by a 19.9-percent jump to $646.7 million in its refrigerated foods segment sales.
Commenting on its outlook, Austin, Minnesota-based Hormel forecast a fiscal first-quarter profit between 40 cents and 46 cents a share, and a full-year profit $1.65 to $1.75 a share.
Johnson told CNBC-TV in an interview that Hormel's focus on introducing and promoting convenience products would underpin profit growth in the year ending October 2005.
Such convenience products, he said, included high-profit meats that were pre-flavored, pre-marinated, pre-cooked and pre-sliced, to capitalize, in part, on the "deteriorating cooking skills" across the country.
The analysts' average profit estimate for the current quarter is for a profit of 40 cents a share, on forecasts ranging from 38 cents to 41 cents a share, according to Reuters Estimates.
For the full-year, Reuters Estimates shows analysts' forecasts ranging from $1.64 to $1.80 a share, with an average view at $1.71 a share. In the prior year, Hormel earned 37 cents a share in the fiscal first quarter and $1.56 a share for the full year.
Before noon, Hormel shares gained 83 cents, or 2.74 percent, to $31.13 on the New York Stock Exchange, where they earlier rose as high as $31.40.