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CHICAGO (Reuters) - Hormel Foods Corp (HRL.N) posted a higher-than-expected quarterly profit on Friday, helped by lower pork costs and strong sales of Spam processed meats, while maintaining its fiscal-year outlook amid soaring grain costs.
Hormel shares were up nearly 5 percent, amid a broad rise in food company stocks.
Hormel has raised prices to help offset rising costs and also seen success in an array of new products, including Spam singles and Hormel chili microwaveable meals, that help improve margins, Chief Executive Jeffrey Ettinger said in an interview with Reuters.
The company, which also sells Hormel meats and Jennie-O turkey, said profit rose to $88.2 million, or 64 cents a share, in the first quarter ended on January 27, from $75.3 million, or 54 cents a share, a year earlier.
Analysts on average forecast 58 cents a share, according to Reuters Estimates.
Sales rose 8 percent to $1.62 billion.
Like most food companies, Hormel has suffered from higher costs of grain and other commodities, although lower pork prices have helped.
The company is raising prices to try to recoup most of the higher costs, Ettinger said, while counting on new products to help boost margins.
Ettinger said he had seen little evidence of consumers trading down to lower-priced items in the wake of rising food prices and a weak U.S. economy. But products like Spam and Hormel chili can appeal to budget-conscious consumers, he said.
"It's clear that there's a slowdown of some sorts going on that we all need to be mindful of," Ettinger said, "but I think our business really has offerings for a lot of different tiers of consumers."
The company stood by its 2008 earnings forecast of $2.30 to $2.40 per share. Analysts on average were expecting $2.35, according to Reuters Estimates.
Hormel shares were up $1.88, or 4.8 percent, at $40.76 in morning New York Stock Exchange trade.
Editing by Steve Orlofsky and Lisa Von Ahn