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Raw Material Costs Signal Warning to Hormel Despite Good Earnings

22 May 2014

US - Raw material costs in pork, beef, turkey and avocado could push Hormel’s earning down, despite reporting a rise in second quarter earnings.

The company reported fiscal 2014 second quarter net earnings of $140.1 million, up 12 per cent from net earnings of $125.5 million a year earlier.

Diluted earnings per share for the quarter were $0.52, up 13 per cent compared to $0.46 last year. Sales for the quarter were $2.2 billion, up 4 per cent from the same period in fiscal 2013.

Jeffrey M. Ettinger, chairman of the board, president and chief executive officer said: “Elevated pork, beef, turkey, and avocado costs, driven by tighter raw material supplies, are presently compressing margins on many of our value-added products. We are maintaining our fiscal 2014 guidance range of $2.17 to $2.27 per share, but expect these cost pressures to push our full year earnings toward the lower end of this range."

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