CHICAGO – Hormel Foods Corp. (HRL) Wednesday posted a 17 percent jump in quarterly profit, boosted by improved profits at its turkey unit, lower feed costs and strength in its grocery products segment.
Hormel also said earnings in the current quarter and fiscal year could miss analysts' expectations, sending its shares down nearly 6 percent.
The maker of Jennie-O turkey products, Spam processed meat and other foods said it expects pork costs to be lower in 2006, which will decrease the cost of making products such as Spam.
Profit in the fiscal fourth quarter that ended Oct. 30 rose to $81.7 million, or 59 cents a share, from $69.8 million, or 50 cents a share, a year earlier. Analysts on average had forecast 58 cents a share, according to Reuters Estimates.
On Nov. 8, the Austin, Minn.-based company raised its earnings forecast for the quarter to 56 cents to 59 cents a share from a previous range of 50 cents to 56 cents.
Sales rose nearly 10 percent to $1.48 billion. Volume rose 12 percent, but fell 2 percent excluding acquisitions.
The largest operating improvement came at the Jennie-O Turkey Store operation, which posted a 31 percent jump in operating profit.
The company said it was also helped by lower pork costs.
Hormel forecast net earnings of 44 cents to 50 cents per share for the fiscal first quarter, including a charge of 4 cents per share related to an accounting rule, and $1.86 to $1.96 per share for the year.
Analysts expect net earnings of 50 cents per share in the first quarter and $1.99 for the year.
Hormel said it distributed more than $15 million in profit-sharing on Wednesday. It started rewarding its employees the day before the Thanksgiving holiday back in 1938.
Shares of Hormel fell $2.02, or 5.77 percent, to $33.01 after falling as low as $32.97 on the New York Stock Exchange.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox