Hormel 3Q Profit Rises 49 Pct Despite Sales Drop

EMILY FREDRIX

MILWAUKEE (AP) — Hormel Foods Corp. said Thursday its third-quarter profit rose 49 percent to beat estimates as costs fell, but sales and volume dropped as consumers limited their spending on more expensive items like microwavable meals.

The Austin, Minn.-based company continued to see strong sales in its Spam franchise, in Hormel chili and in Mexican products like Chi-Chi's. Its operating profit was better in grocery products, refrigerated foods and its Jennie-O Turkey Store brand, even as sales fell.

Conditions improved in its Jennie-O Turkey Store unit, which had been hurting from high ingredient costs last year and an oversupply on the market, which limits the ability to raise prices. Production has been cut just about 10 percent and the company is pleased with the unit's performance, CEO Jeffrey Ettinger said in an interview. Profit rose 97 percent in the turkey business in the quarter, though Ettinger said the results were still lower than they were two years ago.

Volume slipped 2 percent and dollar sales fell 5 percent, but feed costs are coming down as commodity prices tumble, which helps boost profits.