Hormel Foods Q3 profit rises amidst lesser sales

After the problem with its turkey operations regarding avian influenza, Hormel Foods has made a comeback with better earnings for the third quarter.

Pepperoni and deli meat generated higher sales and with the decline in the price of raw pork, the profit zoomed up in Hormel's refrigerated foods segment despite lower total sales.

Skippy peanut butter which was acquired from Unilever and Wholly Guacamole helped in promoting the sales growth and lifted the company's grocery division.

Hormel Foods is organized into five business divisions: Grocery Products, Refrigerated Products, Jennie-O Turkey Store, Specialty Foods and International & Other.

"Our balanced business model has again allowed us to limit volatility in a challenging supply chain situation," as mentioned on Wednesday by Jeffrey Ettinger, Hormel's chief executive via a conference call with analysts.

An increase of 6.4% in earnings was reported by Hormel in spite of a heavy drop in its operation profits coming from Jennie-O Turkey Store unit due to the bird flu outbreak that affected more than 50 farms that supply the fowls over the springtime. This led to the extermination of the whole flocks prompting Hormel to scale back some turkey production and lay off staff.

Hormel said its total sale volume rose 3% from a year ago on greater sales of products such as Hormel chili and Skippy peanut butter. But the income for Jennie-O reduced, dropping the business by 45% in the aftermath of the avian flu epidemic.

The company also mentioned that its net income grew 6% to $146.9 million, or 54¢ per share. Hormel said without the one-time acquisition costs, the company earned 56¢ per share, 1¢ more than analysts expected on average. The giant company's income fell to 4¢ to $2.19 billion.

According to Zach Investment Research that analysts expected $2.24 billion in revenue. Hormel's third quarter ended on July 26.

The Austin, Minnesota-based company is now expecting an adjusted full-year profit of $2.57 to $2.63 per share, up from its previous estimate of $2.50 to $2.60 per share.