Hormel Foods said it has lowered its fiscal 2017 guidance due to high commodity price volatility, after reporting weak results in its third quarter, below market estimates.
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For the full year, the company reduced earnings guidance to $1.54 - $1.58 per share from the low end of $1.65 to $1.71 per share expected earlier.
Jim Snee, president and chief executive officer, said, "We expect continued earnings pressure from higher input costs for key raw materials such as bellies, pork trim, and beef trim.
"While we have communicated price increases in many categories, the increases will not be fully effective until late in the fourth quarter.
"Jennie-O Turkey Store continues to be adversely affected by unfavorable market conditions, as the industry has not returned to normalized turkey production levels."
For the third quarter, Hormel Foods' attributable net earnings declined to $182.51 million from $195.65 million last year. Earnings per share were $0.34, down 6 percent from $0.36 a year ago.
The results reflected the divestiture of the Diamond Crystal Brands business, the divestiture of the Farmer John business, and the acquisition of Justin's, LLC.
Total sales dropped 4.1 percent to $2.21 billion from last year's $2.30 billion. Adjusted sales went up 1 percent.
Analysts expected earnings of $0.37 per share on sales of $2.24 billion for the quarter.
Volume was down 9 percent.
Separately, Hormel Foods announced that it has acquired Cidade do Sol, a growing, branded, value-added meats company in Brazil.
The purchase price was approximately $104 million, subject to customary working capital adjustments. The company offers more than 70 products in 15 categories under the popular Ceratti brand. Cidade do Sol will report into Hormel Foods International. ■
A strong storm that originated over the Pacific has tracked through the Great Basin and is currently transitioning across the Rockies to redevelop across the central High Plains later today into early Saturday morning.