020446 Hormel Lowers Earnings Outlook

Austin, MN - Hormel Foods Corp. lowered its earnings outlook for the second fiscal quarter, saying the recent Russian ban on poultry imports has resulted in an oversupply of meat and poultry on the market.

Its shares sank more than 7 percent, or $1.97 a share, to close at $25 on the New York Stock Excxhange.

The maker of Spam, Dinty Moore beef stew and Jennie-O turkey products said it expects earnings of 20 cents to 24 cents a share for the quarter ending April 27, down from its previous guidance of 30 cents to 34 cents a share.

The current consensus estimate of brokers surveyed by Thomson Financial/First Call was 31 cents per share.

Hormel, based in Austin, earned 28 cents a share in the second fiscal quarter last year.

"Retailers have ben aggressively promoting low prices for chicken, which has resulted in an oversupply of other proteins," said Joel Johnson, Hormel's chairman, president and chief executive.

"These factors, along with production expansion in the turkey industry, have intensified the short-term pricing pressure on turkey and pork," Johnson said.

"We believe the temporary protein oversupply will cycle through the system in the second half of fiscal 2002," Johnson said.

The company expects to have a better idea on supplies when second- quarter earnings are announced May 16.

"Overall, core businesses continue to perform well, but the pricing and margin pressures caused by the Russian ban have negatively impacted our near-term results," Johnson said.

Russia lifted its ban on poultry imports from all but four states on April 15 after the United States promised tighter controls over exports and worked out procedures with Russian officials for salmonella testing. The ban on U.S. chicken and turkey was instituted March 10 after Russian inspectors allegedly found diseased chickens from Pennsylvania, Virginia, North Carolina and Maine.

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