Hormel Foods Reports Record Second Quarter Results

All comparisons are to the second quarter or first half of fiscal 2011.

HIGHLIGHTS

Second Quarter

– Diluted EPS of $.48, up 20 percent from diluted EPS of $.40

– Segment operating profit up 9 percent

– Dollar sales of $2 billion, up 3 percent

– Volume down 2 percent

– Jennie-O Turkey Store operating profit up 50 percent; volume down 2 percent; dollar sales up 7 percent

– Refrigerated Foods operating profit down 25 percent; volume down 4 percent; dollar sales down 1 percent

– Grocery Products operating profit up 10 percent; volume down 3 percent; dollar sales up 1 percent

– Specialty Foods operating profit up 9 percent; volume up 2 percent; dollar sales up 12 percent

– All Other (primarily Hormel Foods International) operating profit up 52 percent; volume up 10 percent; dollar sales up 11 percent

The company reported fiscal 2012 second quarter net earnings of $127.9 million, up 17 percent from net earnings of $109.6 million a year earlier. For the six months ended April 29, 2012, net earnings were $256.3 million, down 1 percent from net earnings of $258.4 million the same period last year. Diluted net earnings per share for the six months ended April 29, 2012 were $.95, equal to diluted net earnings per share of $.95 last year.

Sales for the quarter were $2 billion, up 3 percent from fiscal 2011. For the six months ended April 29, 2012, sales totaled $4.1 billion, up 4 percent from the same period last year.

COMMENTARY

“We are pleased to report record earnings and sales for the second quarter. This is a good example of our balanced business model in action, as we were able to increase earnings in four out of five segments.” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer, “Sales grew three percent, again with four of our five segments registering gains.”

“Our Jennie-O Turkey Store segment delivered another outstanding quarter, driven by value-added sales growth. Our International business also achieved impressive results, led by strong export sales. Both our Grocery Products and Specialty Foods segments returned to earnings growth during the quarter. Results of our Refrigerated Foods segment were significantly pressured by lower pork operating margins,” Ettinger remarked.

“We are particularly encouraged by the continued growth of our Jennie-O Turkey Store value-added sales and our MegaMex Foods joint venture,” Ettinger stated.

SEGMENT OPERATING HIGHLIGHTS – SECOND QUARTER

Grocery Products (13% of Net Sales, 22% of Total Segment Operating Profit)

The Grocery Products segment operating profit increased 10 percent, aided by lower pork and beef input costs. Net sales exceeded last year by 1 percent. Strong results by our SPAM^® family of products and our MegaMex Foods products offset soft sales of our microwave products and DINTY MOORE^® stew.

Refrigerated Foods (51% of Net Sales, 27% of Total Segment Operating Profit)

Refrigerated Foods segment profit declined 25 percent, due primarily to lower pork operating margins during the quarter. Net sales for the quarter declined 1 percent, with lower commodity pork sales offsetting strong sales of HORMEL^® NATURAL CHOICE^® deli meats, HORMEL^® party trays, HORMEL^® pepperoni and DILUSSO^® deliproducts. Foodservice value-added sales also grew during the quarter.

Jennie-O Turkey Store (20% of Net Sales, 35% of Total Segment Operating Profit)

Jennie-O Turkey Store had another excellent quarter, with segment operating profit up 50 percent from a year ago, driven by value-added sales. Net sales for the quarter rose 7 percent, led by sales of JENNIE-O TURKEY STORE^® retail tray pack and turkey burgers.

Specialty Foods (11% of Net Sales, 10% of Total Segment Operating Profit)

The Specialty Foods segment operating profit increased 9 percent, as pricing actions taken earlier helped offset higher raw material costs. Net sales grew 12 percent, led by sales of private label canned meats, ingredients, bulk and nutritional items.

All Other (5% of Net Sales, 6% of Total Segment Operating Profit)

The All Other segment, which consists primarily of Hormel Foods International, grew segment profit 52 percent, and grew net sales by 11 percent, driven by stronger exports of fresh pork and the SPAM^® family of products.

General Corporate Expense

General corporate expenses were lower than last year due primarily to lower pension and insurance costs.

OUTLOOK

“Our second quarter results provide positive momentum heading into the back half of the year. We believe continued weaker pork operating margins will be more than offset by stronger results from our other segments. We expect sales in the center of the store to slowly improve as we continue our advertising support of our HORMEL^® and SPAM^® brands. Taking all of the relevant factors into account, we are maintaining our full-year earnings guidance range of $1.79 to $1.89 per share,” Ettinger concluded.

DIVIDENDS

Effective May 15, 2012, the Company paid its 335^th consecutive quarterly dividend, at the annual rate of $.60.

CONFERENCE CALL

A conference call will be Webcast at 8:30 a.m. CT (9:30 a.m. ET) on Wednesday, May 23, 2012. Access is available at https://www.hormelfoods.com. If you do not have Internet access and want to listen to the call over the phone, the dial in number is 877-941-0844 and you must provide the access code of 4535051. An audio replay is available by calling 800-406-7325 and entering access code 4535051. The audio replay will be available beginning at 10:30 a.m. CT on Wednesday, May 23, 2012, through 11:59 p.m. CT on Wednesday, June 6, 2012. The Webcast replay will be available at 10:30 a.m. CT, Wednesday, May 23, 2012, and archived for one year.

Statements Follow

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Segment Data

Fiscal 2012 Second Quarter Segment Operating Results (dollars in thousands)