Hormel Expects Turkey Supply Constraints To Weigh On FY Earnings

(RTTNews) - Packaged food and meat products maker Hormel Foods Corp (HRL) on Monday said it is facing challenges over turkey supplies to its Jennie-O Turkey Store segment owing to the recent H5N2 avian influenza outbreaks in Minnesota and Wisconsin.

As a result, Hormel expects tight turkey supplies and operational challenges to weigh on earnings in the second half of this year.

According to the company, highly pathogenic H5N2 avian influenza ("HPAI") has been detected at multiple turkey farms that supply Jennie-O Turkey Store, resulting in the loss of affected flocks and temporary quarantine of farms in the area until a full cleaning process is completed.

"Lower turkey supply is expected to impact plant operations and cause reduced sales volumes as the year progresses," the company said.

Hormel said it continues to expect fiscal 2015 adjusted earnings of $2.50 to $2.60 per share, while analysts expect $2.38 per share.

While the company expects that farm outbreak occurrences will decline as the weather improves, it fears that turkey supply challenges will push full year earnings toward the lower end of its guidance range.

Hormel expects the financial impact of HPAI to be partly offset by favorable hog prices benefitting the Refrigerated Foods segment and portions of the Grocery Products segment.

The company said Jennie-O Turkey Store is managing the problem in cooperation with the USDA Animal and Plant Health Inspection Service, state agency officials, and industry associations.

Hormel will announce second quarter earnings on May 20.