AUSTIN, Minn. (AP) — Foodmaker Hormel Foods Corp. said Wednesday its fiscal second-quarter profit rose 17 percent, boosted by strong results at its Jennie-O Turkey Store business and higher demand for Spam.
The profit beat Wall Street predictions, and the company backed its full-year profit prediction. Hormel shares rose more than 6 percent in premarket trading.
For the quarter ended April 29, Hormel earned $127.9 million, or 48 cents per share, up from $109.6 million, or 40 cents per share, in the same quarter last year.
Sales rose 2.7 percent to $2.01 billion from $1.96 billion.
Analysts, on average, expected a profit of 42 cents per share on $2.04 billion in revenue, according to a FactSet poll.
Profit at the Jennie-O business, which accounts for about 20 percent of the company's sales, rose 50 percent, as strong demand for its turkey burgers boosted sales 7 percent and margins improved.
The company's "Other" division, which mainly consists of its international business and accounts for about 5 percent of sales, posted a 52 percent jump in profit and 11 percent increase in sales, mainly as a result of strong exports of Spam and fresh pork products.
Strong demand for Spam, along with lower pork and beef costs, also helped boost profit at the company's grocery division up 10 percent, the company said.
More than half of Hormel's revenue comes from its refrigerated foods segment, which includes pepperoni, Natural Choice deli meats, and Country Crock side dishes like mashed potatoes and macaroni and cheese. Profit in that division fell 25 percent on lower pork-related profits, while sales edged down 1 percent, the company said.
Hormel said it expects pork margins to remain weak during the second half of the year, but be offset by stronger results from the company's other businesses.
The company backed its previous full-year profit prediction of $1.79 to $1.89 per share. Analysts polled by FactSet expect a profit of $1.81 per share.
In premarket trading, Hormel shares rose $1.81, or 6.2 percent, to $31.