Hormel Foods lowered its 2017 fiscal year guidance on continued turkey pricing concerns, which had hit the company in its most recent quarterly earnings that included Thanksgiving and Christmas.
Operating profits in its Jennie-O Turkey Store unit fell 25 per cent in the first quarter on lower-than-expected commodity prices. Volumes and sales were up 5 per cent and 3 per cent, respectively, excluding the impact of the the divestiture of two brands and the acquisition of another.
The company’s full-year guidance was lowered to $1.65 per share from $1.71.
“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,” said Jim Snee, president and chief executive, adding profits elsewhere in the business would offset some of the headwinds.
“The balanced model we have intentionally built in our business will allow us to overcome the challenges at Jennie-O Turkey Store. I remain confident in our team’s ability.”
The group, which also owns Spam and Skippy peanut butter, reported flat net earnings of $235m in the quarter ending in January. Net sales in the quarter decreased 1 per cent to $2.3bn.
Shares in the company fell 4.8 per cent in pre-market trading in New York to $37.30.