AUSTIN, Minn. (AP) — Hormel Foods' fiscal second-quarter net income fell 2 percent as it dealt with one-time costs related to its acquisition of the Skippy peanut butter brand, higher grain costs and weaker turkey prices.
Its quarterly performance missed Wall Street's expectations.
The meat producer, known for Spam and other cured, smoked and deli meats, earned $125.5 million, or 46 cents per share, for the three months ended April 28. That compares with $127.9 million, or 48 cents per share, a year earlier.
Analysts predicted earnings of 49 cents per share, according to a FactSet survey.
The current quarter included about $9 million in one-time costs related to the Skippy deal. Hormel Foods Corp. agreed to buy Skippy in January from Unilever for $700 million.
Revenue rose 7 percent to $2.15 billion from $2.01 billion, but fell short of the $2.19 billion that Wall Street expected.
Revenue from the refrigerated foods segment, which comprises nearly half of Hormel's total revenue, fell 2 percent to $1.01 billion due to increased grain costs.
Grocery products revenue, which includes Spam and makes up 18 percent of total revenue, climbed 49 percent to $393.5 million thanks to the Skippy transaction and better sales of products such as Dinty Moore stew, Spam and Mary Kitchen hash.
Specialty foods revenue increased 7 percent to $245.7 million, while international and other revenue rose 21 percent to $117.4 million partly because of increased sales of Spam products.
Revenue from Jennie-O Turkey Store, which makes up 18 percent of revenue, declined about 2 percent to $384.7 million on higher grain costs and weaker commodity turkey prices.
The Austin, Minn., company still foresees full-year earnings of $1.93 to $2.03 per share. Analysts expect $1.99 per share.
Hormel shares finished at $42.40 on Wednesday. They have traded in a 52-week range of $27.28 to $43.17.