May 23, 2013 / 11:50 AM / in 5 years

CORRECTED-UPDATE 1-Hormel Foods profit declines as costs pinch

(Corrects headline and text to show adjusted profit was in line with Wall Street estimates. Also corrects name of segment to Jennie-O Turkey Store, from Jennie-O Turkey Stores)

* Second-quarter profit $0.49/share vs est $0.49

* Sales $2.15 bln vs est $2.19 bln

* Sales fall 2 pct at Jennie-O Turkey Store business

* Incurred non-recurring costs of $9 mln on Skippy acquisition

May 23 (Reuters) - Hormel Foods Corp, the maker of Spam canned ham, reported a lower quarterly profit due to expenses related to its Skippy acquisition and higher costs at its Jennie-O Turkey Store business.

Sales fell 2 percent at its Jennie-O Turkey Store operations, which accounts for about 18 percent of total revenue, while profit at the business declined 26 percent.

“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. Excluding one-time costs, the company earned 49 cents per share.

Sales rose about 7 percent 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. (Reporting by Arpita Mukherjee in Bangalore; Editing by Roshni Menon)

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