Hormel Boosts 2009 Earnings Outlook As Feed Costs Ease

   DOW JONES NEWSWIRES 
 

Hormel Foods Corp. (HRL) boosted its fiscal-year earnings outlook, citing solid performances from numerous segments, including improvement in its long-struggling Jennie-O operations.

The raised view comes as the meat industry, like many others, deals with a demand slump and oversupply woes that have forced producers, processors and supermarkets to cut production and prices.

The maker of Spam luncheon meat now expects profit of $2.36 to $2.42 a share. The company in May projected earnings at the high end of its $2.15 to $2.25 a share target.

Hormel said Monday the boost was led by a "strong" performance for its refrigerated-foods business, the grocery segment and improvement at Jennie-O. The turkey operations were hurt for some time by sharply higher feed costs, a bane to many meat producers the past several years. But commodity costs have fallen sharply the past year.

The company also said it benefited from a better investment performance in its rabbi trust, which had been hard hit by the stock-market turmoil. Assets of the trust, established to fund executive retirement and deferred income plans, are invested in equity and income securities and generally track the markets.

In May, Hormel posted a 3.6% rise in fiscal second-quarter profit on a gain from a dissolved joint venture, as production cuts helped offset falling volume. But Chairman and Chief Executive Jeffrey M. Ettinger said the company had "seen improvement" in sales of some convenience-food items.

The company will provide more details when it releases its fiscal third-quarter results on Aug. 20.

Hormel shares closed Friday at $36.12 and were inactive premarket Monday. The stock is up 1.4% the past year.

-By Mike Barris, Dow Jones Newswires; 212-416-2330; [e-mail];