Hormel Foods Corp. ended its fiscal year on a high note, crushing Wall Street profit expectations.
According to AgriMoney, Hormel reported its earnings 18 percent higher on a per share basis in the quarter ending Oct. 27, helping by a rise in retail pork profits.
However, the food giant cautioned that higher beef costs and “uncertainty” in hog supplies could potentially erode the boost to margins from lowers grain prices.
Purdue University reports that the relatively resilient hog price and low grain costs encourage products to rebuild, with the U.S. breeding herd projected to expand by as much as 3 percent over the next year. However, porcine epidemic diarrhea virus (PEDv) is raising questions – and doubts – over this growth.
Broker U.S. Commodities warned that "new cases of PEDv remain a concern for the bears" on lean hog prices.
Hormel reported a 30 percent increase in operating profits for the company’s refrigerated food business, its biggest earning. This rise reflected "enhanced margins in our retail bacon business, along with improved pork operating margins as compared to last year's challenging pork operating environment.”
The Minneapolis (Minn.) Star Tribune reports that while the company beat earnings expectations, analysts point that Hormel was helped by a $12 million reduction in selling, general and administration expenses.