US group Hormel Foods today (23 February) lowered its forecast for its annual earnings per share due to the outlook for its turkey business.
Hormel cut its earnings per share forecast from its November estimate of US$1.68 to $1.74 to a range of $1.65 to $1.71.
The company saw profits from its Jennie-O Turkey Store division fall by 25% in its first quarter despite better sales amid lower turkey commodity prices.
Jim Snee, Hormel’s president and CEO, said the business expects that pressure to continue. “We are tempering our full year outlook for the Jennie-O Turkey Store segment given the shortfalls in the first quarter and the expected continuation of pricing pressure due to low commodity turkey prices,” Snee said.
“Improvements in our other segments are expected to offset some of the earnings headwinds from Jennie-O Turkey Store. The balanced model we have intentionally built in our business will allow us to overcome the challenges at Jennie-O Turkey Store.”
The new forecast came alongside the publication of the financial results for Hormel’s first quarter.
The company’s net earnings stood at $235.3m, inching up from the $235.1m generated last year. Hormel’s operating income dipped from $359.5m a year ago to $355.4m.
Net sales reached $2.28bn, down from $2.29bn a year earlier.
Sales and profits from Hormel’s grocery division rose, helped by Justin’s, Wholly Guacamole and Skippy.
Profits from Hormel’s refrigerated foods arm increased amid “solid value-added product growth” but sales fell on the back of the company’s move to sell its Farmer John meats business to Smithfield Foods in January.
Hormel shares fell in pre-market trading.