020533 Hormel Foods Reports Second-Quarter Performance

Austin, MN - Hormel Foods Corporation reported on performance for its fiscal second quarter ended April 27, 2002: (NOTE: All prior year comparisons have been adjusted for SFAS 142 and EITF 00-14 and EITF 00-25.)

* EPS of $.23 cents, within revised guidance announced April 24 * Excess protein supply pressures margins * Grocery Products segment volume up 4 percent with operating profit up 20 percent

* Refrigerated Foods segment volume down 6 percent and operating profit down 46 percent

* Jennie-O Turkey Store segment operating profit up 18 percent

* Foodservice volume and profits continue improvement

* Joint venture with Cargill planned to provide national branded pork and beef program

Hormel Foods Corporation, the multinational marketer of consumer-branded meat and food products, today reported net earnings for the fiscal 2002 second quarter of $32.7 million. This was a decline of 22 percent from net earnings of $41.8 million in the comparable fiscal 2001 period. Earnings per share were $.23, down 23 percent from $.30 in the fiscal 2001 second quarter.

The company reported second-quarter dollar sales of $955 million, down from $962 million recorded in the year-ago period. Volume was down 1 percent versus the comparable fiscal 2001 second quarter.

For the six months ended April 27, net earnings were $83.1 million, or $.59 per share, compared to $84.5 million, or $.60 per share, for the same period last year. Sales totaled $1.94 billion, up from $1.85 billion in the prior-year six-month period. Volume was up 2 percent for the first half compared to last year.

Joel W. Johnson, chairman of the board, president and chief executive officer said, "The industry faced aggressive retail promotions resulting from the protein oversupply created by the Russian ban on poultry imports. Even though the performances of our Grocery Products reporting segment and the Foodservice and Meat Products business units of the Refrigerated Foods reporting segment were strong, they were not able to offset the effect the Russian ban had on the market," explained Johnson. "Two of our key growth initiatives, ethnic foods and Hormel HealthLabs, continued to show healthy growth. Jennie-O Turkey Store's second quarter results were accretive and would have been even better if not for the effects of the Russian ban. Despite the near-term difficulties caused by this unexpected market condition, Hormel Foods is maintaining aggressive marketing support for its branded, value-added products," Johnson said.

"Our long-term procurement agreements had a negative impact on earnings in the second quarter as a result of lower-than-expected live hog markets," Johnson said. "The excess supply of protein kept live hog market prices below our contract price. Even though low hog prices are generally a net positive for Hormel Foods' bottom line, retail demand was weak due to the protein oversupply. As a result, the margins were not strong enough to offset the losses on the procurement contracts. These contracts have protected our pork producers through this period of economic pressure."

We expect this protein oversupply to cycle through the system in the second half of fiscal 2002. As we work through these near-term difficulties, we remain focused on our long-term growth strategies," Johnson said.

"Part of growing the business is making sure we are positioning Hormel Foods to serve the changing marketplace efficiently," Johnson said. "Our latest initiative in this effort is the recently announced intent to form a joint venture between Hormel Foods and the Excel Corporation, a subsidiary of Cargill, Incorporated, to nationally market a full line of beef and pork under the HORMEL ALWAYS TENDER brand. The joint venture, called Precept Foods LLC, will allow major grocery retailers to efficiently secure a complete line of high-quality, differentiated beef and pork menu solutions for their customers," Johnson said.

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