(Reuters) - Hormel Foods Corp’s (HRL.N) quarterly sales missed estimates on Thursday and the packaged food maker said its profit will take a hit of up to six cents per share annually due to the U.S.-China tariffs, sending its stock down as much as 5.5 percent.
A few weeks ago bigger rival Tyson Foods (TSN.N) too had cut its full-year profit forecast due to the impact of tariffs on domestic and export prices of meat.
Following U.S. tariffs on aluminum and steel imports, China retaliated with tariffs on U.S. pork and beef, with Mexico and Canada also implementing levies. This led to over supplies of red meats, pushing the prices for chicken and turkey lower in the domestic market.
“We do see risk from tariffs, which could negatively impact fresh pork exports and the (international) segment’s results,” James Snee, chief executive officer of Hormel, said on a post-earnings call with analysts.
CFO James Sheehan said hog prices were 10 percent lower in the third quarter compared to a year earlier and expects the trend to continue into the current quarter.
Turkey prices have also been hit due to excess availability and cheap prices for pork and beef.
Poultry producer Sanderson Farms Inc (SAFM.O) also reported quarterly results that missed estimates, blaming tariffs that have led to excess supply of competing proteins in the United States.
Overall, Hormel said it expects to see a four to six cent per share impact to profit every year, mainly due to China’s 62 percent tariff on U.S. pork products.
However, the company maintained its current year forecast of $1.85-$1.95 per share, despite expecting a 1 to 2 cent impact from tariffs.
Hormel’s quarterly sales of $2.36 billion missed estimates for third straight quarter. Analysts on average had expected$2.38 billion, according to Thomson Reuters I/B/E/S.
Shares of Hormel, which sells packaged meat under the Jennie-O and Natural Choice brands, pared losses to trade 2.5 percent lower at $37.63 in morning trading.
Reporting by Siddharth Cavale and Soundarya J in Bengaluru; Editing by Arun Koyyur