Investors ordered up a second helping of foodmakers after better-than-expected profits on Friday.Hormel and Smucker both reported stronger earnings despite a slow economy, and Heinz said profits would be at the high end of expectations. Earnings slipped at Campbell Soup, but it said it would do what other foodmakers already have — pass along higher costs to customers. Shares of all four rose 4 percent or more on a day when the broader market was mixed. "In tough economic times, the comfort, cost and convenience of a peanut butter and jelly sandwich gains even greater favor with our consumers," said Smucker Chairman and co-CEO Tim Smucker.

All foodmakers have been struggling with high fuel prices and rising costs for ingredients such as wheat and corn — which in turn have driven up prices for animal feed. Many have passed along price increases to customers. Hormel's Jennie-O Turkey Store turkey has been especially vulnerable because Hormel owns some turkey farms — meaning it is exposed directly to higher feed prices.



Hormel was the biggest surprise on Friday, helped by a recovery in Jennie-O results along with a strong showing from Spam. A slow economy boosted Spam sales, along with advertising, said Chairman and CEO Jeffrey M. Ettinger. Jennie-O's operating profit rose 16 percent to $34.8 million thanks to higher prices and manufacturing efficiencies. Hormel's refrigerated foods profit rose 50 percent to $62.8 million, helped by lower pork costs.

Overall, Hormel said its first-quarter profit rose 17 percent to $88.2 million, or 64 cents per share, from $75.3 million, or 54 cents per share, a year earlier. Sales rose 8 percent to $1.62 billion. The results were well ahead of the expectations of analysts surveyed by Thomson Financial: 58 cents per share on revenue of $1.59 billion.

"WOW" wrote D.A. Davidson & Co. analyst Timothy S. Ramey.

Austin, Minn.-based Hormel said feed prices alone would rise $120 million this year, although some of that was offset with hedging. As for the turbulent economic environment, Ettinger said some foodservice customers have shifted toward buying lower-priced items, but he has not seen a similar adjustment by retail customers.

Hormel says it still expects 2008 earnings of $2.30 to $2.40 per share. Wall Street expects $2.35 per share.

Jams and jellies maker J.M. Smucker Co. also overcame higher commodity prices, reporting a 5 percent increase in its third-quarter profit. Smucker earned $42.4 million, or 75 cents per share, compared with $40.4 million, or 71 cents per share, during the same period last year. Restructuring and merger costs reduced the total by 4 cents a share. That brought Smucker's results in a penny ahead of the expectation of analysts.

Sales increased 27 percent to $665.4 million, helped by $69.3 million in sales from Eagle Family Foods, which Smucker acquired in May for $133 million. The Smucker's, Jif, Crisco and Pillsbury brands had sales growth in part linked to higher prices.

Deutsche Bank NA analyst Christina McGlone wrote that Smucker was also helped by non-operating items like a lower tax rate, lower interest expense, and higher interest income. She kept a "hold" rating on the shares in part because of what she called Smucker's "above-average exposure to commodities experiencing inflation."

H.J. Heinz Co., meanwhile, narrowed its earnings guidance for the year to $2.60 to $2.62 per share, the upper end of its previous range. Analysts polled by Thomson Financial had been predicted $2.62 on average.

The company, known for its namesake ketchup, said sales would grow in each of its businesses, supported by double-digit increases in spending on product marketing and research. It said it expects third-quarter operating income to rise 8 percent on solid performance in North American consumer products, Europe, Asia/Pacific and other areas, partially offset by the U.S. foodservice business.

Pittsburgh-based Heinz, one of the world's largest food companies, is scheduled to report its third-quarter results on Feb. 26.

"We believe Heinz will have several price increases going into place this month, especially in North America," Stifel Nicolaus & Co. analyst Christopher Growe wrote in a note. That means pricing will accelerate quarter-after-quarter, "which we estimate will continue into the fourth quarter and perhaps early fiscal 2009," he wrote.

Rising ingredient prices prompted Campbell Soup Co. to say it will raise soup prices an average of 5 percent in coming months, after announcing that its second-quarter profit slipped 3.9 percent. Higher commodity costs — Campbell predicted 6 percent to 7 percent this year — along with higher energy prices and promotional spending offset a sales increase.

The world's largest soupmaker said it earned $274 million, or 71 cents per share, for the three months ended Jan. 27. That was down from $285 million, or 72 cents a share, a year ago. Sales climbed 7.4 percent to $2.22 billion.

The company said sales of its condensed soup, which have been revitalized in the last few years after a long, slow decline, slipped 1 percent. But ready-to-serve soup sales were up 8 percent, despite a decline of sales in soup sold in microwavable bowls.

All four foodmakers saw their shares jump. Hormel rose $1.51, or 3.9 percent, to close at $40.39. Heinz rose $2.33, or 5.2 percent, to $45.12. Smucker shares were up $2.41, or 5 percent, to $50.26. Campbell's shares rose $1.93, or 6.1 percent, to $33.44.

Matt Arnold, an analyst with Edward Jones, said Campbell's stock surge was surprising for a company that in the last few quarters has not been able to expand sales of its condensed and ready-to-serve soups at the same time.

He said investors might be reacting largely to Campbell's expectation that fiscal 2008 profits will grow 5 percent to 7 percent.

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Associated Press Writers Daniel Lovering in Pittsburgh, Geoff Mulvihill in Mount Laurel, New Jersey, and M.R. Kropko in Cleveland contributed to this report.