Hormel Falls After Cutting Forecast on Higher Costs
Hormel Foods Corp. (HRL), the maker of Spam luncheon meat and Jennie-O Turkey Store products, fell the most in more than six months after saying profit in its current year will be less than previously forecast amid rising costs.
The shares dropped 3.6 percent to $39.19 at the close in New York. The stock has climbed 26 percent this year, compared with a 16 percent gain for the Standard & Poor’s 500 Index.
Hormel in January agreed to acquire the Skippy peanut-butter business from Unilever for about $700 million to expand further into China. The company is looking to that product to complement its recent introduction of its pork-based Spam to the Asian nation. Lower-than-expected results in its pork operations contributed to the lower forecast, the company said in a statement.
“Higher input costs and softer sales of our retail products in our Refrigerated Foods segment are the primary reason for the expected shortfall in our second-half results,” Chief Executive Officer Jeffrey M. Ettinger said in the statement.
Profit per share in the year ending in October will be $1.88 to $1.96, down from a previous forecast of $1.93 to $2.03, the Austin, Minnesota-based company said today in the statement. The average of 10 analysts’ estimates compiled by Bloomberg was $1.99.
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