Hormel Foods Reports First Quarter Results

HIGHLIGHTS

¨ Diluted EPS of $.64, up 19 percent from $.54 per share in 2007

¨ Dollar sales of $1.62 billion increased 8 percent from 2007 (up 5 percent excluding acquisitions)

¨ Volume up 5 percent compared to last year (up 3 percent excluding acquisitions)

¨ Operating profit up 25 percent from 2007

¨ Grocery Products operating profit up 10 percent; volume up 6 percent; dollar sales up 10 percent

¨ Refrigerated Foods operating profit up 50 percent; volume up 8 percent (up 3 percent excluding acquisitions); dollar sales up 8 percent (up 3 percent excluding acquisitions)

¨ Jennie-O Turkey Store operating profit up 16 percent; volume up 3 percent; dollar sales up 5 percent

¨ Specialty Foods operating profit up 1 percent; volume down 4 percent; dollar sales up 7 percent

¨ All Other operating profit up 39 percent; volume up 6 percent; dollar sales up 21 percent

The company reported fiscal 2008 first quarter net earnings of $88.2 million, up 17 percent from earnings of $75.3 million a year earlier. Diluted earnings per share for the quarter were $.64 this year compared to $.54 per share last year. Sales totaled $1.62 billion, up from $1.50 billion in fiscal 2007.

COMMENTARY

“Our team has ample reason to be proud of our results in the first quarter, continuing the momentum we achieved in the last quarter of fiscal 2007,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “Our Refrigerated Foods segment led the way, as lower pork input costs combined with increased sales of value-added products generated a significant increase in earnings. Our Grocery Products segment also delivered higher than expected sales and earnings, aided by strong sales of the SPAM family of products and continued growth of the HORMEL COMPLEATS microwave product line. We are pleased to have recently announced our decision to build a new $89 million plant in Dubuque, Iowa, scheduled to open in November 2009, to support our HORMEL COMPLEATS microwave tray business.”

“Jennie-O Turkey Store overcame higher commodity grain input costs through a combination of recaptured pricing, product mix improvements, and manufacturing efficiencies, to turn in an excellent quarter as well. Our International segment had another outstanding quarter, posting double-digit increases in dollar sales and profits, primarily attributable to strong export sales of the SPAM family of products and fresh pork,” Ettinger said. “Finally, the Specialty Foods segment showed strong sales growth but flat earnings, as it sought to offset increased input costs with added contract manufacturing volumes and an improved product mix.”

“We expect higher grain input and fuel costs for the balance of the year, which will impact Jennie-O Turkey Store and portions of our Refrigerated Foods business. However, anticipated lower hog input costs, price advances, and manufacturing efficiencies will help offset these increased costs,” Ettinger continued. “Our success with adding value to our products and improving the product mix, along with our balanced business model, should allow us to continue to be successful in spite of volatility in the commodity markets.”

SEGMENT OPERATING HIGHLIGHTS – FIRST QUARTER

Grocery Products (14% of Net Sales, 22% of Total Operating Profit)

The Grocery Products segment had a great start to the year with segment profit up 10 percent compared to last year. Continued growth of the HORMEL COMPLEATS microwave product line was a key driver during the quarter. Strong sales of the SPAM family of products and HORMEL and STAGG chili also contributed to top and bottom line results for the segment. Results for the CHI-CHI’S and VALLEY FRESH product lines were down for the quarter compared to last year but additional marketing and promotional support is planned to drive improved results for these brands.

Refrigerated Foods (53% of Net Sales, 39% of Total Operating Profit)

Operating profit increased 50 percent in the Refrigerated Foods segment compared to the first quarter last year. Lower pork raw material input costs led to significant margin expansion across the segment’s value-added businesses. Sales of key value-added products also increased during the quarter. The Meat Products business unit recorded double-digit sales increases in HORMELrefrigerated entrees and HORMEL NATURAL CHOICE sandwich meats. The integration of Burke Corporation continues to proceed as planned and was accretive to the first quarter results.

Jennie-O Turkey Store (18% of Net Sales, 22% of Total Operating Profit)

The Jennie-O Turkey Store segment posted operating profit results 16 percent higher than last year for the first quarter. The segment was able to overcome higher commodity grain input costs through a combination of higher pricing, product mix improvements, and manufacturing efficiencies. Value-added revenue grew 5 percent with each of the retail, deli, and foodservice divisions contributing to the increase. Key products posting strong first quarter results includeJENNIE-O TURKEY STORE frozen turkey burgers, JENNIE-O TURKEY STORE marinated tenderloins, and JENNIE-O TURKEY STORE rotisserie deli products.

Specialty Foods (12% of Net Sales, 11% of Total Operating Profit)

Operating profit in the Specialty Foods segment increased 1 percent compared to the first quarter of fiscal 2007. Sales and operating profit were higher for the quarter in the Specialty Products business unit behind strong demand for contract manufacturing. Century Foods International also posted improved profit results due to a favorable product mix shift. Operating profit was slightly lower in the Diamond Crystal Brands business unit as a better product mix was unable to completely offset higher input costs.

All Other (3% of Net Sales, 6% of Total Operating Profit)

The International business unit had another strong quarter with operating profit up 39 percent compared to last year. Strong export sales of the SPAM family of products, STAGG chili, and fresh pork were key drivers during the quarter. The profitability of our China operations also improved compared to last year as a result of higher selling prices and a continued emphasis on growing value-added sales. Equity in earnings of affiliates improved compared to last year due to better results at our Purefoods-Hormel joint venture in the Philippines.

Net Interest and Investment Income

Net interest and investment income declined for the quarter due primarily to $6.3 million of lower returns on our rabbi trust investment. Interest expense was slightly higher for the quarter due to higher outstanding short-term debt balances related to the Burke acquisition.

OUTLOOK

“We are reconfirming our fiscal 2008 guidance range of $2.30-$2.40 per share. Although we anticipate pressure from higher than expected grain and energy costs, we expect to continue to benefit from lower protein input costs. The strength of our core businesses, the growth of our value-added products, and the ability of our people to adapt to changes in the business environment should allow us to meet our goals,” Ettinger concluded.

DIVIDENDS

Effective Feb. 15, 2008, the company will pay its 318^th consecutive quarterly dividend. The annual rate is $.74.

CONFERENCE CALL

A conference call will be Webcast at 10:00 a.m. CT on Friday, Feb. 15, 2008. Access is available at 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 800-218-0713. An audio replay is available by calling 800-405-2236 and entering access code 11107655#. The audio replay will be available beginning at 12:00 p.m. CT on Friday, Feb. 15, 2008, through 11:59 p.m. CT on March 1, 2008. The Webcast replay will be available at 12:00 p.m. CT, Friday, Feb. 15, 2008, and archived for one year.

Statements Follow

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Segment Data

Fiscal 2008 First Quarter Segment Operating Results (in Thousands)