AUSTIN, Minn. (AP) — Hormel Foods Corp.'s fiscal second-quarter profit climbed 41 percent despite facing rising food costs, helped by strong performance from refrigerated foods like deli meats and Jennie-O Turkey.
The maker of Spam and Dinty Moore stew also raised its full-year earnings outlook.
Like many food makers, Hormel has been dealing with higher ingredient costs and has raised its prices to help cope. Hormel said it expects to face higher costs for the rest of the year and will continue to raise prices and cut costs to offset this.
"We believe our strong portfolio of brands and our balanced model will allow us to overcome those obstacles," said CEO Jeffrey Ettinger.
The Austin, Minn.-based company said its net income rose to $109.6 million, or 40 cents per share, for the three months ended May 1, up from $77.9 million, or 29 cents per share, a year ago. Analysts expected a slightly higher 41 cents per share, according to Fact Set.
Revenue increased 15 percent to $1.96 billion from $1.7 billion. That was much better than the $1.82 billion analysts predicted.
All results reflect a two-for-one stock split Hormel implemented Feb. 1.
Shares fell 43 cents to $29.59 in pre-market trading after rising earlier.
Sales of Hormel's largest segment, refrigerated foods, which make up more than half of Hormel's total revenue, rose nearly 17 percent. Top sellers were Hormel party trays and deli meats.
Sales of Jennie-O Turkey, which makes up 19 percent of total revenue, rose 25 percent, helped by cost cuts and stronger commodity meat markets.
Grocery products revenue edged up 1.4 percent, boosted by sales of Spam, Hormel bacon toppings, Hormel Kitchen hash and Dinty Moore stew, while sales of microwave products and imported canned meats were weaker.
Specialty foods revenue rose 4 percent, with operating profit hindered by higher raw material costs.
The company now expects full-year net income of $1.67 to $1.73 per share, up from prior guidance of $1.62 to $1.68 per share. Analysts expect $1.71 per share.