Hormel Foods Announces Third Quarter Earnings

Aug 13, 1998, 01:00 ET from Hormel Foods

    AUSTIN, Minn., Aug. 13 /PRNewswire/ -- Hormel Foods Corporation
 (NYSE:   HRL) today announced earnings of $20,994,000, or $.28 per share of
 common stock for the 13-week period ended July 25. This represents an increase
 of 15.7 percent over third quarter earnings one year ago of $18,153,000, or
 $.24 per share.
     Net earnings for the first three quarters were $94,139,000, a 45.2 percent
 improvement over 1997 nine-month earnings of $64,823,000. Earnings per share
 for the 39 weeks were $1.23 versus $.84 for the same three quarters of last
 year. The nine-month results include an extraordinary gain of $17,402,000, or
 $.23 per share, for the sale of the company's Davenport (Iowa)
 gelatin/specialized proteins plant to Goodman Fielder Limited, Sydney,
 Australia. Excluding the one-time gain, the company generated net earnings for
 the 39 weeks of $76,737,000, or $1.01 per share, an increase of 18.4 percent
 over the comparable period of fiscal 1997. For the first three quarters of
 fiscal 1998, the average number of shares used in calculating the per share
 amounts was 76,274,000.
     Joel W. Johnson, chairman of the board, president and chief executive
 officer, noted that tonnage growth of 8.6 percent for the third quarter and
 7.4 percent year-to-date enabled the company to report increased earnings for
 both the 13-week third quarter and nine months. "All our core marketing groups
 and nearly every major product category achieved volume growth, many recording
 double-digit gains," said Johnson. "Equally satisfying, our strategy of
 focusing on value-added, consumer-branded meat and food products enabled us to
 expand margins."
     Although tonnage gains remained strong, third quarter dollar sales were
 $755,769,000, a 3.1 percent decrease from net sales of $779,679,000 for the
 corresponding 13-week period of last year. Net sales for the 39 weeks of the
 current year were $2,349,008,000, down 1.7 percent from nine-month sales last
 year of $2,388,443,000. Generally reduced selling prices for fresh pork and
 turkey products contributed to the decline in dollar sales.
     Johnson noted that performance of the company's Foodservice Group has been
 especially impressive. "Foodservice succeeded in recording its ninth
 consecutive quarter of double-digit tonnage growth with volume increases
 attained in virtually every category, including presliced meats, portion-
 controlled pork and precooked roast beef, sausage, ham and vending products."
 The Meat Products Group, enjoying its best year, continued to make great
 progress with its branded, value-added line of fresh and processed products.
 Within key branded categories, deli-style and boneless hams performed very
 well as did company breakfast meats, Hormel microwave bacon, Black Label
 bacon, Range Brand bacon and Little Sizzlers pork sausage. Sales volume and
 distribution of Always Tender fresh pork and Always Tender flavored pork
 continued to enjoy rapid growth.
     Within the Prepared Foods Group, third quarter tonnage for the Grocery
 Products Division surpassed that of one year ago, resulting in a year-to-date
 record tonnage level. Much of the total volume increase was generated from
 such flagship brands as SPAM luncheon meat, Hormel chili, Dinty Moore stew and
 Mary Kitchen hash. Other major product lines, including Stagg chili, Hormel
 chunk meats, Hormel bacon bits, Herb-Ox bouillon and Hormel microwave meals
 also performed well.
     Jennie-O Foods posted record volume, ending the quarter 20.2 percent ahead
 of one year ago and up 23.2 percent year-to-date. Although turkey industry
 pricing has shown signs of rebounding, generally unfavorable market conditions
 produced excess industry supplies and depressed selling prices and operating
     For Hormel Foods International, export tonnage volume rose 31.4 percent
 for the quarter. "Our two Chinese joint ventures remain in a start-up mode,"
 said Johnson. "The ventures continue to increase distribution in Beijing and
 Shanghai with more than 750 retail stores and major foodservice accounts such
 as McDonald's, Pizza Hut, Dairy Queen and Domino's now serviced." New bologna,
 chopped ham and luncheon meat products were introduced to complement the core
 line of franks, sausage, ham and other branded processed meats. In Australia,
 launch of the 14-item Stagg chili line has met with considerable success while
 good volume growth for SPAM luncheon meat led to a record category share in
 the United Kingdom.
     Consolidated Condensed Statements of Earnings
                             Thirteen Weeks Ended     Thirty-nine Weeks Ended
     (In Thousands Except
      Per Share Amounts)
                        July 25, 1998July 26, 1997 July 25, 1998July 26, 1997
     Net Sales             $755,769      $779,679   $2,349,008    $2,388,443
     Earnings before
      Income Taxes           33,859        28,190      149,598       102,076
     Provision for
      Income Taxes           12,865        10,037       55,459        37,253
     Net Earnings            20,994        18,153       94,139        64,823
     Earnings Per Share        $.28          $.24        $1.23          $.84

SOURCE Hormel Foods