Hormel Foods today (25 May) maintained its forecast for annual earnings – a prediction it revised in February – but the company cautioned its profits could fall at “the lower end” of its projected range, with the US group’s turkey business expected to continue to face challenges.
“We are maintaining our fiscal 2017 guidance range of US$1.65 to $1.71 per share but expect the results at Jennie-O Turkey Store to push our full-year earnings toward the lower end of this range,” Hormel president and CEO Jim Snee said. “We expect the pressure on Jennie-O Turkey Store to continue for the remainder of the fiscal year given the oversupply in the turkey industry.”
Snee’s comments came alongside the publication of Hormel’s half-year results, which included lower sales and earnings on a group-wide basis, as well as a slump in profits from its turkey business.
Hormel posted first-half net earnings of $446.1m for the 26 weeks to 30 April, down from $450.5m a year earlier. The company’s operating profit stood at $671.4m, compared to $683.4m in the first half of its previous financial year.
The Spam and Muscle Milk maker’s net sales stood at $4.47bn, down from $4.59bn a year ago.
The operating profit from Hormel’s Jennie-O Turkey Store arm tumbled 27.1% to $132m. The unit’s sales inched up 1.7% to $809.2m.
Hormel said lower turkey commodity prices, pricing pressure from “competing proteins” and increased operating costs had been putting pressure on the division.