Hormel Beats Despite Earnings Fall

AUSTIN, Minn. -- Hormel Foods (HRL Quote) said Tuesday its fiscal fourth-quarter profit fell 33% as it continued to grapple with higher costs for key commodity ingredients, but results still topped Wall Street expectations.

The Austin, Minn.-based company also raised its annual dividend by 2 cents, but forecast 2009 profit well below analysts' estimates, citing.

Hormel, which makes Spam, chili and Jennie-O Turkey products, earned $67.8 million, or 50 cents per share, in the three months ended Oct. 26. That's down from $101.2 million, or 73 cents per share, a year ago.

The latest quarter included a $20.4 million investment loss in the company's rabbi trust due to financial market turmoil, compared with a $4.6 million gain a year ago.

Revenue rose 12% to $1.86 billion from $1.66 billion, helped by sales of refrigerated and specialty foods.

The results beat estimates of analysts polled by Thomson Reuters, who expected earnings of 48 cents per share on revenue of $1.8 billion.

Operating profit in Hormel's grocery products segment slipped 3% on a slowdown in Hormel Compleats microwave meals, and 44% at its Jennie-O Turkey Store as costs for fuel and feed offset higher sales. Food companies of all types are grappling with higher costs for key ingredients like grains for feed, fuel and other commodities. They've instituted price increases to recoup the higher costs, and commodities have since come down from their record highs this summer.

But operating profit in the specialty foods segment surged 49% and was up 12% in refrigerated foods.