Hormel Foods forecasts annual profit above estimates on higher prices
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FILE PHOTO: Cans of Hormel chili stand on partially empty grocery store shelves inside Kroger Co.'s Ralphs supermarket, in Los Angeles, California, U.S. March 15, 2020. REUTERS/Patrick T. Fallon/File Photo
Dec 4 (Reuters) - Skippy peanut butter maker Hormel Foods forecast annual profit above estimates on Thursday, betting that its cost-cutting plan, higher prices and sustained demand for turkey will overcome high input costs of beef and pork.
The company's shares were up about 5% in premarket trading.
Hormel has raised prices for some products, as the company, like rival Tyson Foods, is facing high input costs of commodities such as turkey, chicken, beef and pork.
The Jennie-O turkey retailer has also benefited from strong demand for turkey and other lean meats, as consumers prefer to save money by cooking meals at home rather than dine out.
Net sales rose 1% in the fourth quarter in the retail segment, which contributes 62% of its total revenue, driven by demand for turkey and the Planters snacks brand.
But the recent spread of bird flu has impacted its chicken supply chain. The beef market has seen prices rise as well, partly due to a high tariff on imports from Brazil.
The company said it has kickstarted a restructuring plan in the quarter, which will include reducing administrative expenses as well as its workforce.
As part of the plan, it expects to incur charges of $9 million to $12 million in fiscal year 2026 in severance and other costs.
Hormel forecast adjusted profit per share of $1.43 to $1.51 for fiscal 2026, the midpoint of which is above analysts' average estimate of $1.45, according to data compiled by LSEG.
The company expects its annual net sales to grow in the range of $12.2 billion to $12.5 billion, compared with estimates of $12.4 billion.
Hormel's fourth-quarter sales of $3.19 billion missed analysts' average estimate of $3.23 billion and its adjusted quarterly profit of 32 cents per share edged past estimates of 30 cents per share.
(Reporting by Koyena Das and Juveria Tabassum in Bengaluru; Editing by Sahal Muhammed)
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