Hormel Spams Up Its Q3 — Riding Them There Pork Bellies Down!

Hormel Foods Corporation, the infamous maker of Spam, just raised its fiscal 2009 earnings forecast earlier today, suggesting its third quarter results would best expectations. According to a Reuter's note on the news, "The maker of Spam lunch meat said the third quarter benefited from a strong performance in refrigerated foods, improvement at Jennie-O turkey and solid results in grocery products. Hormel also benefited from better investment performance in its "rabbi trust" investment trust, Chairman and Chief Executive Jeffrey Ettinger said in a statement."

Here at Spend Matters, we also suspect that lower hog prices might be playing a role as well -- not to mention the fact that people tend to buy Spam and related cheap processed meats to save money when the economy is down. From a hog standpoint, Dow Jones suggests that "The ample supplies along with a steep break in wholesale pork prices and collapse in lean hog futures to new contract lows in the front months are pressuring cash prices ... Some dealers and market managers describe the market conditions as worse than in 1998, when a washout of small producers began due to a collapse in cash prices ... The U.S. Department of Agriculture reported the pork cutout Thursday down $2.23 at $54.64, the lowest since July 7 and only 60.9% of the year-ago figure."

Even though riding the commodity markets down is not a good Spend Management strategy, it can no doubt lead to improved near-term earnings provided the spend was not hedged in the first place. But personally, I find that the more ironic story here is how a company that sounds like it has Jewish roots -- i.e., the "rabbi trust" -- could be involved in selling pork. Alas, I suppose someone's got to eat the mystery meat. And for the rest of us, there's always Spam haiku, I suppose, (e.g., “Pink beefy temptress, I can no longer remain, Vegetarian”).

Jason Busch

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