UPDATE 2-Hormel Foods says avian flu likely to hurt turkey sales till 2016

Wed May 20, 2015 11:46am EDT
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* Q2 earnings of $0.67/shr vs estimate $0.62

* Q2 sales $2.28 bln vs estimate of $2.40 bln

* Says Jennie-O sales may fall 15 pct in 2nd half of 2015 (Adds details from conference call, updates shares)

May 20 (Reuters) - Hormel Foods Corp, the maker of Spam lunch meat, said it expected sales at its Jennie-O Turkey Store business to fall about 15 percent in the second half of the year, due to a supply shortfall caused by an avian flu outbreak in the United States.

However, shares of the company, which reported a better-than-expected second-quarter profit and reaffirmed its full-year profit forecast, rose 4.6 percent to $58.34 on the New York Stock Exchange.

The Jennie-O business ended the second quarter facing substantial supply chain challenges, Chief Executive Jeffrey Ettinger said in a statement on Wednesday.

"Many of our barns remain empty under quarantine... we will be purchasing some additional meat from external sources but at a higher cost," Ettinger said on a post-earning conference call.

The company also said it expected the first half of 2016 to be "somewhat subdued" for the Jennie-O business.

The business, which accounts for about 18 percent of Hormel's revenue, got about 78 percent of its turkeys from its farms in Minnesota and Wisconsin last year.   Continued...