Meat + Poultry - March 2006 - 10

Business Notes
Hormel's earnings rise in first quarter of 2006
Hormel Foods' balanced portfolio
helped drive its net earnings higher for
the first quarter of fiscal 2006 compared
with the same period in fiscal 2005. The
Austin, Minn.-based firm reported net
earnings for the quarter of $69,276,000,
equal to 50c per share
on the common stock,
up 7 percent from
$64,633,000, or 47c per share, in the
first quarter of fiscal 2005.
"The balanced strength of our business allowed us to deliver top- and bottom-line growth for the quarter, even
though we faced considerably higher
energy and freight costs," said Jeffrey
Ettinger, president and C.E.O. Continued strong performance from Jennie-O
Turkey Store and significant improvement from the Specialty Foods segment were key drivers behind our solid
first-quarter results."
Sales for the quarter ended Jan. 29,
2006, were $1,415,933,000, up 11 percent from $1,271,431,000 in the same
period a year ago.
The company's Jennie-O Turkey Store
benefited from high turkey meat mar-

kets, lower feed costs and value-added
sales growth. While overall tonnage for
the segment was lower due to planned
reductions in harvest, value-added product sale volume increased 9 percent.
Hormel's Refrigerated Foods division
delivered 3 percent
higher operating profit driven by the contributions from last year's acquisitions
and growth in key categories, such as
refrigerated entrees, flavored meats
and party trays. Foodservice volume
was up 6 percent led by growth in
the bacon category. The sliced meats
category also reported double-digit
growth driven by the Bread Ready
beef and ham items.
Case-ready products sold through
the Precept Foods joint venture reported exceptional growth in the quarter.
The national rollout of Hormel Natural
Choice luncheon meats, which were
introduced in the first quarter, began
shipping this past February.
"Looking ahead, we believe lower
pork markets will benefit our valueadded processed items in Refrigerated

Sanderson Farms feels pinch of decreased exports
Reduced overall market prices for chicken products
led to a loss of $8.6 million for the first quarter of
fiscal 2006 for Sanderson Farms, Inc., Laurel, Miss.
The loss compares with net income $10 million,
equal to 50c per share on the common stock, for the
first quarter of fiscal 2005. Sales for the quarter were
$222,114,000, which compared with $233,290,000
for the first quarter of 2005.
"The results for the first quarter of fiscal 2006 reflect a difficult market environment," said Joe Sanderson Jr., chairman and C.E.O. of Sanderson Farms. "This weakness is primarily
related to a precipitous drop in export demand and more sluggish domestic demand compared with a year ago. While these factors are affecting our financial
results over the short term, we are confident Sanderson Farms is well positioned
to resume its pattern of profitable growth when market conditions improve."
Sanderson said overall market prices for poultry products were significantly
lower in the first quarter of 2006 compared to a year ago. As measured by a simple
average of the Georgia Department of Agriculture's "dock price" for whole chickens, prices decreased approximately 3.2 percent in the company's first fiscal quarter
compared with the same period in 2005.

"The results for
the first quarter of
fiscal 2006 reflect
a difficult market
environment."

MEAT&POULTRY

March 2006

www.MEATPOULTRY.com

Foods and certain items in Grocery
Products," Ettinger said. "On the flip
side, cost factors that could pressure
profitability are higher beef, freight
and energy costs."

Sysco acquires
Desert Meats & Provisions
Houston-based Sysco Corp. announced this past month it had
reached a preliminary agreement
to acquire Desert Meats & Provisions, Inc., the largest independent
specialty meat distributor in the
Las Vegas and southern Nevada
foodservice markets. Terms of the
transaction were not disclosed.
Desert Meats & Provisions was
founded in 1978 by Harlon Unruh,
who continues as the company's
C.E.O. The company operates
from a 25,000-square-foot processing and distribution facility in
Las Vegas, distributing more than
1,200 products, including fresh
and frozen specialty and variety
meats, aged beef, pork, lamb, veal,
poultry and processed meat.
The company's base of customers
includes more than 200 premier Las
Vegas mega-resorts, hotel-casinos,
and white tablecloth restaurants. For
its fiscal year ended Dec. 31, 2005,
Desert Meats generated sales of approximately $55 million.
"The acquisition of Desert Meats
& Provisions is a logical geographic expansion of Sysco's specialty
meat strategy," said Larry Accardi,
executive vice president of contract
sales and president of specialty
distribution companies at Sysco.
"The combined purchase between
our Newport Meat operation and
our broadline company in Las Vegas will leverage Newport Meat's
current distribution efforts in the
Las Vegas market, while also supporting Sysco Food Services of Las
Vegas with enhanced procurement
capabilities to further grow their
center-of-the-plate offerings."

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Meat + Poultry - March 2006

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