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Hormel Earnings Down

27 February 2009

US - US pig meat and food processing giant Hormel reported net earnings of $81.4 million, down eight per cent from earnings of $88.2 million a year earlier for the first quarter of the 2009 financial year.

Diluted earnings per share for the quarter were $.60 this year compared to $.64 per share last year and sales reached $1.69 billion, up from $1.62 billion in 2008.

"Despite a very challenging economic climate, our first quarter results leave us on track to meet our annual earnings guidance goal. As anticipated, we started out the year with weaker operating results, resulting in a decline of 4 cents per share from our record earnings of a year ago. Our Grocery Products segment had a solid quarter, led by strong canned meat sales. Our Jennie-O Turkey Store segment is doing a good job of addressing the difficult market conditions, including very weak commodity meat markets and higher input costs that continue to work their way through the system," said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer.

"Our Refrigerated Foods segment experienced a difficult quarter. Higher than anticipated hog costs, combined with weaker than expected primal markets, led to losses in our pork operations that we were not able to offset, despite a strong performance by our meat products group. Our Specialty Foods and All Other segments also had weaker results," Mr Ettinger added.

"Changes in consumer behavior resulting from the recession have had a mixed affect on our sales. We have seen an upswing in sales of many of our retail products, particularly some of our traditional franchises across our different business segments, and a softening of demand for some of our newer convenience items. On balance, our overall retail sales have been relatively strong, while foodservice sales show softness."

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