AUSTIN, Minn. – Hormel Foods Corp. (HRL), maker of Spam and Dinty Moore (search) stews, posted earnings that fell short of expectations as higher turkey profits were largely offset by rising pork and beef costs at other units. Its shares fell more than 4 percent.
The company earned $55.8 million, or 40 cents per share, in the three months ended May 1, up from $53.7 million, or 38 cents per share, a year ago.
Sales grew 15 percent to $1.31 billion from $1.14 billion as acquisitions boosted sales of its core refrigerated foods business more than 20 percent. Excluding recently bought or sold businesses, the company said overall sales would have risen about 4 percent.
Analysts polled by Thomson Financial were looking for earnings of 42 cents per share on $1.31 billion in overall sales.
Hormel shares fell $1.41, or 4.3 percent, to $31.34 on the New York Stock Exchange (search). They have traded in a 52-week range of $25.14 to $33.10.
The refrigerated foods unit posted revenue of $687.9 million, up from $542 million a year ago. However, higher meat costs cut into this growth, leading operating earnings from this segment to fall 31 percent to $25.5 million. The company said increased prices for pork and beef also cut into operating profit for grocery products, which fell 2 percent to $28.5 million.
Meanwhile, Jennie-O Turkey (search) sales rose 4 percent to $249.9 million, but the business' operating profit more than doubled. The company said the unit benefited from higher turkey meat markets, lower grain markets and improved production.
Looking forward, the company said it has increased promotional spending to boost results for its grocery products and refrigerated foods. Hormel predicted third-quarter earnings of 34 cents to 40 cents per share, in range of the 38 cents per share forecast by analysts.
The company said it continues to expect year-end profit of $1.70 to $1.80 per share. Analysts predict earnings at the high end of that range at $1.78 per share.