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.
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.
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
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.