AUSTIN, Minn. (AP) — Hormel Foods Corp. raised its 2009 profit guidance Monday, citing strong performance from its refrigerated foods and grocery segments, as well as improving performance in its turkey business.
Shares rose on the news, jumping $2.29, or 6.3 percent, to $38.41 in morning trading.
The Austin, Minn.-based company said its third-quarter results were stronger than expected, so it boosted its guidance to profit of $2.36 to $2.42 per share for the year. The company had previously projected a profit of between $2.15 and $2.25 per share.
Analysts polled by Thomson Reuters expect a profit of $2.29 per share for the year.
The company is due to announce its third-quarter results Aug. 20.
Hormel said conditions for its Jennie-O Turkey Store unit improved. The unit had been suffering, along with other meat makers, because of high ingredient costs reached last year and oversupply, which limits the ability to raise prices.
CEO Jeffrey Ettinger said in a statement the Spam maker also saw continued solid results from its grocery products segment.
Deutsche Bank-North America analyst Christina McGlone told clients in a note that lower pork prices helped margins in refrigerated foods.
McGlone said she continues to see production cuts in the turkey unit, with egg sets — a measure of how many eggs are laid — down 9.7 percent so far this year. Breast meat prices are down, she noted, but they are higher than lows reached in April.
Meat makers have been cutting production to help boost prices.
McGlone raised her estimate for 2009 earnings per share to $2.40 from $2.33, and her target share price to $38 from $35.
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