AUSTIN, Minn. - Hormel Foods Corp. Thursday said its profit surged 62 percent in the latest quarter, boosted by growing sales and the sale of a unit.
But the Austin-based food processor said it wasn't able to deliver the level of operating profit margin it had hoped for, due to higher grain prices.
Based on these costs and continued weakness in the grocery products unit, the maker of Spam and other packaged food products cut its forecast for the rest of the fiscal year to below Wall Street views.
Shares of Hormel were at $26.10 in early trading Thursday, down $2.04, or 7.2 percent, on the New York Stock Exchange.
For the fiscal 2004 third quarter ended July 24, Hormel reported net income of $56.3 million, or 40 cents a share. That's up sharply from last year's profit of $34.7 million, or 25 cents a share, in the same period.
The latest quarter included a gain of 8 cents a share on the sale of the Vista International Packaging Inc. unit. Earnings excluding items were, therefore, 32 cents a share.
Analysts surveyed by Thomson First Call had forecast, on average, earnings of 34 cents a share, excluding items.
Sales in the latest quarter rose 15 percent to $1.16 billion from $1.01 billion. Increases of more than 10 percent at its refrigerated foods, Jennie-O-Turkey Store, specialty foods and other divisions offset flat results at the grocery products unit.
The company said it continues to feel the pressure of higher pork and beef prices, but it benefited from improved volume in ethnic products and the Spam line, as well as price increases.
For the first nine months of the fiscal year, net income climbed to $161.8 million, or $1.15 a share, from the previous year's $115.4 million, or 83 cents a share. The latest results include the gain of 8 cents a share from the Vista transaction.
Sales increased 13 percent to $3.43 billion from $3.03 billion.
Based on industry factors and the Hormel's own business plan, the company projects fourth-quarter earnings of 40 cents to 46 cents a share and full-year earnings of $1.46 to $1.52 a share, excluding items. In May, Hormel had raised its per-share earnings outlook for fiscal 2004 to $1.50 to $1.62 from a prior range of $1.46 to $1.60.
First Call had recently projected fourth-quarter earnings of 53 cents a share and full-year earnings of $1.62 a share.
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