Hormel Foods Corp. reported a sizable drop Thursday in its first quarter net earnings, but still boasted an increase in total sales.

The company reported fiscal 2012 first quarter net earnings of $128.4 million, down 14 percent from earnings of $148.8 million a year earlier. Sales totaled $2.04 billion, which was up 6 percent from fiscal 2011.

Hormel CEO and president Jeff Ettinger pointed out that while the first quarter earnings of $.48 per share was below the $.55 per share of the first quarter of 2011, it was still the second best in the company’s history.

“As we stated in our fourth quarter release, we anticipated a challenging operating environment this year, and for comparisons to be more difficult in the first half of the year and to become more favorable in the back half,” Ettinger said in a news release.

After 10-consecutive quarters of growth, Hormel reported a 3 percent drop in net earnings for the fourth quarter of 2011, its first quarterly net earnings loss since the first quarter of 2009. Still, the company reported an annual net earnings increase of 20 percent in fiscal 2011, the third-consecutive year of growth.

Ettinger said Hormel will look for “slowly improving results” this year from its refrigerated foods segment, which declined by 44 percent this quarter. Hormel blames the drop in refrigerated foods — which accounted for 53 percent of Hormel’s net sales — to lower pork operating margins, but Ettinger said he expects those margins to “return to more normalized levels.”

The grocery products segment — which accounts for 13 percent of net sales and includes pepperoni, Natural Choice deli meats, and Country Crock side dishes like mashed potatoes and macaroni and cheese — declined by 9 percent from the first quarter of 2011. Hormel officials said that loss was primarily because of lower volumes and higher raw material costs.

Hormel also reported a 4 percent decline in revenue for specialty foods — which accounts for 11 percent of net sales — because of higher raw material and freight costs.

The company did record increases in two of its five segments, Jennie-O turkey and its international segment, and four of the five segments registered sales gains in the quarter. Jennie-O makes up 19 percent of Hormel’s net sales, and had a first quarter profit increase of 4 percent. While its international segment only accounts for 4 percent of net sales, it saw a jump of 25 percent for the quarter.

Ettinger expects sales in grocery products to improve as they begin their new advertising campaign for Hormel and Spam brands. The company rolled out at its annual shareholders meeting on Feb. 1 a series of humorous U.S. and international ads to mark Spam’s 75th anniversary in 2012.

“I was pleased with the strong results achieved by our Jennie-O segment, led by increased retail value-added sales,” Ettinger said. “Our international business also delivered a solid quarter, fueled by strong export sales.”

Ettinger concluded that the company’s full-year earnings guidance range of $1.79 to $1.89 would remain unchanged.