WASHINGTON (dpa-AFX) - Hormel Foods Corp. (HRL) Wednesday said its second-quarter profit increased from the previous year, supported by higher sales. Earnings topped wall Street estimates, while sales came short of expectations. Further, accommodating the impacts of avian influenza, the company updated its earnings outlook for the year.
Jeffrey Ettinger, chairman, president and CEO, said, 'We achieved record second quarter earnings and sales, driving double-digit earnings growth with all five segments delivering increases. Although declining pork markets drove lower pricing and net sales this quarter, Refrigerated Foods increased operating profit by 52 percent with strong sales growth of foodservice and retail value-added products.'
Net earnings increased to $180.2 million from $140.1 million reported a year earlier. Earnings per share rose to $0.67 from $0.52 last year.
On average, eight analysts polled by Thomson Reuters expected the company to report earnings per share of $0.63 for the quarter. Analysts' estimates typically exclude special items.
Sales grew to $2.28 billion from $2.24 billion in the prior year. Analysts expected revenue of $2.40 billion for the quarter.
In Refrigerated Foods, sales dropped 8 percent to $1.02 billion, reflecting lower pricing due to declining pork markets and the dissolution of the Precept Foods joint venture. But segment profit increased 52 percent, driven by lower input costs along with strong sales growth of value-added items like Hormel pepperoni and Hormel Gatherings party trays.
Jennie-O Turkey Store sales climbed more than 15 percent in the quarter to $438.9 million, but avian influenza began to impact operations towards the end of the second quarter. Yet, segment profit jumped 41 percent, driven by the growth of value-added products and lower grain and fuel input costs.
Grocery Products generated $397.27 million, up 1.3 percent from last year, amid softer sales of Hormel Compleats microwave meals. Segment profit increased 1 percent from last year.
Sales of Specialty Foods climbed 32.3 percent to $287.42 million, largely due to to the addition of Muscle Milk protein nutrition product sales. The division posted an 11 percent increase in segment profits despite a $4.5 million charge due to the closure of its CytoSport production facility in Benicia, California.
Looking ahead, the company expects Jennie-O Turkey Store to be significantly challenged, due to the impacts of avian influenza on the turkey supply chain.
Hormel Foods maintained its 2015 adjusted earnings guidance at the lower end of the company's previously stated $2.50 to $2.60 per share range. Analysts expect the company to report 2015 earnings per share of $2.54.
The stock rose 0.1 percent on Tuesday to close at $55.79.
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