Shares were off nearly 5% in pre-market trading despite the foods producer trumpeting record first quarter earnings per share (EPS) of 44 cents, up one cent on the year before.
The group now expects full-year EPS to fall within a range spanning from US$1.65 to US$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 due to low commodity turkey prices,” said Jim Snee, who is president and also chief executive of Hormel.
“Improvements in our other segments are expected to offset some of the earnings headwinds from Jennie-O Turkey Store,” he added.
The gloomy outlook offset a decent set of numbers from the Spam seller covering the three months to the end of January.
Net sales eased 1% to US$2.28bn from the year before, while earnings after tax were flat year-on-year at US$235mln, reflecting the impact of disposals.
Grocery product sales rose 7% from the year before, helped by the acquisition of Justin’s.
The Refrigerated Foods segment profit increased 4% even as sales declined 3%, largely because of the sale of the Farmer John business in January 2017.
Jennie-O Turkey Store sales increased 13% in value and sales volume increased 22% but profit slumped 25%.
The Specialty Foods division’s sales were flat, while the group’s overseas operations saw sales dip 2% year-on-year.
Story by ProactiveInvestors