Hormel Foods Corp stood by its full-year earnings outlook on Thursday despite pressure from higher grain costs.
The company also reported a higher quarterly profit that met Wall Street estimates as it benefited from gains across its businesses, which include Spam canned ham, Hormel meats and Jennie-O turkeys.
The worst drought in more than half a century in the U.S. Midwest has scorched corn and soybean crops while driving up prices of wheat and other grains. This has fueled a spike in corn costs that is pressuring livestock producers by making feed more expensive.
Although higher costs will be a challenge, Hormel said, it expects continued sales and earnings growth this year because of its balanced business model.
It said it still expected a full-year profit of $1.79 to $1.89 per share. Analysts on average are expecting $1.85, according to Thomson Reuters I/B/E/S.
Hormel's earnings rose to $111.2 million, or 41 cents per share, in the third quarter ended on July 29 from $98.5 million, or 36 cents per share, a year earlier.
Net sales rose 5 percent to $2 billion, in line with Wall Street estimates.
The grocery products segment, which reported a 32 percent jump in operating profit, benefited from strong sales of Spam.
The company's shares were up 0.9 percent at $28.68 in early trading.