Hormel Foods Corp, the maker of Spam canned ham, reported a quarterly profit that missed Wall Street expectations due to expenses related to its Skippy acquisition and higher costs at its Jennie-O Turkey Store business.
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Sales fell 2% at Jennie-O Turkey Stores, which accounts for about 18% of total revenue, while profit at the business declined 26%.
"We expect results in our Jennie-O Turkey Store segment will turn the corner as pressures from higher commodity grain prices and weaker turkey commodity meat prices begin to moderate in the back half of the year,'' chief executive Jeffrey Ettinger said in a statement.
Hormel, which bought Unilever Plc's Skippy peanut butter brand in January, said the integration of the domestic peanut butter business into its grocery products unit was completed during the quarter.
The company said its second-quarter earnings were hurt by non-recurring costs of $9 million related to the Skippy acquisition.
Second quarter net income fell to $125.5 million, or 46 cents per share, from $127.9 million, or 48 cents per share, a year earlier.
Sales rose about 7% to $2.15 billion in the quarter.
Analysts on average expected the company to earn 49 cents per share, on revenue of $2.19 billion, according to Thomson Reuters I/B/E/S.
The company's shares closed at $42.40 on the New York Stock Exchange on Wednesday.