Austin, MN - Hormel Foods Corp., the maker of Spam luncheon meat, said its fiscal third quarter earnings rose 16% as demand for Spam and other products grew.
But Hormel, the nation's eighth largest meat company, also said dollar sales fell, due largely to lower prices for fresh pork and turkey products. Hormel said its focus on higher margin products like processed foods and branded meats drove earnings growth despite the lower sales.
Hormel earned $21.0 million, or 28 cents a share, on sales of $755.8 million in its third quarter ended July 25. That was up from last year's $18.2 million, or 24 cents a share, on sales of $779.7 million. The earnings fell short of Wall Street expectations for $0.32 a share, according to estimates compiled by research firm First Call.
Hormel's stock was down 13 cents at $29.69.
Company-wide tonnage volume grew 8.6% for the quarter and 7.4% for the year-to-date, evidence of strong demand for Hormel's meat products which include Hormel chili, Dinty Moore stew and Stagg chili, the company said.
But weak meat pricing, notably turkey, continues to be a problem for the company and was the primary factor in Hormel's lower third quarter sales.
"Although the turkey industry pricing has shown signs of rebounding, generally unfavorable market conditions produced excess industry supplies and depressed selling prices and operating margins," Hormel said in a statement.
Meat Industry Insights News Service
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