Hormel Foods Reports 13.7% First Quarter Increase in Operating Earnings

Feb 17, 2000, 00:00 ET from Hormel Foods

    AUSTIN, Minn., Feb. 17 /PRNewswire/ --
 Hormel Foods Corporation (NYSE:   HRL) today announced operating earnings of
 $43,848,000, or $.30 per share, for the first quarter ended January 29. This
 is an improvement of $5,276,000, or 13.7 percent, over first quarter operating
 earnings one year ago of $38,572,000, or $.26 per share.
     Total reported earnings for the first quarter of fiscal 1999 of
 $42,380,000, or $.29 per share, were slightly higher than announced operating
 earnings due to a one-time gain of $3,808,000, or $.03 per share, for the sale
 of land by Campofrio Alimentacion, S.A., Madrid, Spain, a leading global foods
 company in which Hormel Foods has a 21.4 percent ownership interest.
     All per share amounts have been adjusted to reflect the two-for-one split
 of Hormel Foods common stock approved by shareholders on January 25.
     Dollar sales for the first quarter were $903,913,000, an increase of
 $104,908,000, or 13.1 percent, from the $799,005,000 reported for the first
 quarter of fiscal 1999. This corresponds to a 5.4 percent tonnage increase
 which followed an 8.7 percent gain in last year's first quarter and 7.1
 percent for the full fiscal 1999 year.
     Joel W. Johnson, chairman of the board, president and chief executive
 officer, was pleased with the overall performance of the company's core
 business groups and the key strategies in place that continue to provide solid
 top and bottom line growth. "The volume growth continues at Hormel Foods. We
 are pleased to see customers and consumers responding favorably to our many
 product initiatives. Our quarterly earnings gains have been particularly
 strong in recent years and the just concluded first quarter was no exception,"
 said Johnson. "Our basic strategies of adding value to fresh pork, growing the
 ethnic foods business, expanding foodservice and core consumer franchises, and
 building upon our already successful Jennie-O Foods and international
 operations are producing the very positive financial results we have
     Within the Prepared Foods Group, many of the company's best-known brands,
 SPAM luncheon meat, Dinty Moore stew, Hormel chili, Mary Kitchen hash and
 Hormel chunk chicken and chunk ham enjoyed double-digit tonnage gains. The El
 Torito line of Mexican sauces and foods continued to perform well in its
 markets and will be helped by the introduction of frozen fajitas and a sweet
 corn cake mix for club store sales. The company's line of microwave entrees
 was expanded to include two new Dinty Moore American Classics items -- au
 gratin potatoes & ham and macaroni & cheese with Cure 81 ham -- as well as a
 new Kid's Kitchen cheezy mac & franks.
     As evidence of the company's continuing emphasis to form strategic
 partnerships with its key customers, the Grocery Products Division was
 notified it had been selected to receive Wal-Mart Stores' prestigious "Vendor
 of the Quarter" award for excellence in product, value and service. The
 company's Meat Products Division was similarly honored last year.
     Late in the first quarter, Hormel Foods announced the formation of a joint
 venture with Eridania Beghin-Say (EBS) of Paris, France, to market the
 Carapelli brand of olive oil in the United States and Puerto Rico. Initial
 trade acceptance of the premium extra virgin, extra virgin, mild and light
 olive oil varieties has exceeded expectations.
     Volume growth of key branded processed meats and fresh pork products were
 contributing factors behind the Refrigerated Foods Group's first quarter
 results. A new sales record for retail ham products, led by Cure 81 ham, was
 established during the Christmas holiday season. Bacon sales were also at an
 all-time high and Hormel pepperoni, fueled by the introduction of a new
 Tabasco flavor as well as deli-style and bite-size varieties, also showed
 strong volume and category share growth. Sales of Hormel turkey breast and
 beef deli products rose due to increased market distribution while effective
 trade promotions led to volume gains for Di Lusso Genoa salami and Hormel hard
 salami. All categories of Always Tender fresh pork continued their exceptional
 growth record. Development of this growing brand was enhanced with the
 introduction of four varieties of fully cooked entrees -- beef roast, pork
 roast, beef tips with gravy and meat loaf with tomato sauce.
     Also within the Refrigerated Foods Group, Foodservice operations recorded
 double-digit increases in branded tonnage. Hormel franks, Fast'N Easy burgers,
 pork sausage and precooked bacon as well as Special Recipe pork sausage, Grill
 Perfect bacon, Layout Pack wide-shingled bacon, Old Smokehouse Applewood
 smoked bacon and Bread Ready presliced meats showed excellent gains. The first
 quarter introduction of Always Tender fresh pork to foodservice customers has
 resulted in significant sales volume growth.
     Jennie-O Foods also enjoyed strong foodservice tonnage increases supported
 by expanded distribution with national distributors, major national restaurant
 chains and contract foodservice accounts. Retail sales increased substantially
 with tonnage increases and volume share gains coming from Jennie-O turkey
 burgers, Jennie-O turkey franks, Jennie-O Extra Lean turkey bacon and Jennie-O
 white and dark turkey pan roasts.
     For Hormel Foods International (HFI), fresh and frozen pork and Jennie-O
 turkey contributed to strong tonnage and dollar sales growth. In Guam, initial
 sales of Tabasco flavored SPAM luncheon meat have been impressive. New
 Chinese-style hams, in select and smoked varieties, are off to a good start in
 the Beijing and Shanghai markets. During the quarter, Hormel Alimentos S.A. de
 C.V., a key joint venture in Mexico, purchased the Solo brand of bouillon.
 Plans are to greatly broaden distribution of this well-known brand. Another
 joint venture, Purefoods-Hormel Company, based in Manila, Philippines,
 announced plans to construct a new plant to manufacture for retail sale the
 Tender Juicy and Beefy brands of hot dogs and for foodservice accounts a
 variety of sliced luncheon meats.
     Effective February 15, the company paid its 286th consecutive quarterly
 dividend which also represented the 34th consecutive annual increase in the
 quarterly dividend rate. Reflecting the two-for-one stock split, the newly
 established annual rate is $.35 per share.

SOURCE Hormel Foods