Hormel Foods says turkey supplies “challenged” by avian flu 5/20/2015

UPDATE 1-Hormel Foods says turkey supplies “challenged” by avian flu<HRL.N> – RTRS

 

20-May-2015 06:20:21 AM

 

(Adds details, background)

    May 20 (Reuters) – Hormel Foods Corp <HRL.N>, the maker of

Spam lunch meat, reported lower-than-expected quarterly sales

and said its Jennie-O Turkey Store business would be

“significantly challenged” due to an outbreak of avian flu in

the United States.

    The company said last month that a fall in turkey supplies

would push its full-year adjusted earnings towards the lower end

of its forecast range of $2.50-$2.60 per share.

    Hormel reaffirmed the forecast on Wednesday.

    The Jennie-O business, which accounts for about 18 percent

of Hormel’s revenue, got about 78 percent of its turkeys from

its farms in Minnesota and Wisconsin last year. The company got

the rest of its turkeys from independent suppliers.

    About 5.5 million turkeys and egg-laying chickens have

either died from the flu virus or are set to be culled in

Minnesota, the largest producer of U.S. turkeys, state officials

said this month. [ID:nL1N0XW20L]

    The virus has been confirmed in 16 states and Canada, and

has devastated Midwestern poultry and egg producers in recent

weeks, leading to the culling of 33 million birds.

[ID:nL1N0Y330D]

    The Jennie-O business ended the quarter facing substantial

supply chain challenges brought on by the outbreak, Chief

Executive Jeffrey Ettinger said in a statement.

    Hormel said this month that it would temporarily lay off 233

workers at a Minnesota plant as the outbreak had reduced the

number of turkeys available for processing. [ID:nL1N0XW2BA]

    The company’s net income rose to $180.4 million, or 67 cents

per share, in the second quarter ended April 26, from $140.7

million, or 52 cents per share, a year earlier, boosted by lower

costs in its refrigerated foods business, its biggest.

[ID:nBw8bSFTFa]

    Net sales rose 1.5 percent to $2.28 billion.

    Analysts on an average had expected earnings of 62 cents per

share and revenue of $2.40 billion, according to Thomson Reuters

I/B/E/S.

    Up to Tuesday’s close of $55.79, Hormel’s shares had fallen

4 percent since April 8, when the company announced that avian

flu had been detected in one of its turkey flocks.

 

 

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