Aug. 22--Hormel Foods Corp. warned Thursday that the rising costs of feed and fuel will continue to weaken its bottom line into the first half of 2009.

Those costs took a toll on third-quarter earnings, which fell 9 percent from a year ago, to $51.9 million. Sales at the Austin-based maker of Spam rose 10 percent from a year ago, to $1.68 billion.

Investors, already warned to expect bad news for the quarter that ended July 27, bid Hormel shares up 30 cents, to $35.44.

The cost of feeding and transporting turkeys and turkey products took a big bite out of the Jennie-O Turkey Store unit, where third-quarter operating profit plunged 61 percent despite price increases. Jennie-O accounts for about 19 percent of total Hormel sales.

Recent decreases in fuel and grain prices will help, but not in the near future. "The benefit of lower grain cost and the product cost may not be realized in our Jennie-O Turkey operating results until it's spring next year," CEO Jeff Ettinger said in a conference call Thursday.

Sales in Hormel's grocery segment, which includes Dinty Moore stew and Compleats microwave entrees, rose 10.3 percent in the third quarter.

Emma L. Carew --612-673-7405

3rd quarter FY2008, 7/27

2008 2007 % chg. Revenue $1,678.1 $1,520.0 +10.4 Income 51.9 57.4 -9.5 Earn/share 0.38 0.41 -7.3 9 months Revenue $4,893.4 $4,528.7 +8.1 Income 217.7 200.7 +8.5 Earn/share 1.58 1.44 +9.7 Figures in millions except for earnings per share.

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