Hormel cuts outlook as China tariffs bite pork sales

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Hormel Foods Corp. is cutting its full-year revenue outlook after quarterly sales missed estimates on Thursday.

The Austin, Minn.-based food company trimming its full-year revenue forecast to $9.4 billion to $9.6 billion, down from $9.7 billion to $10.1 billion.

Hormel (NYSE: HRL) also said it expects to see a four-to-six cent per share hit to annual earnings, mainly due to China’s increased tariffs on U.S. pork products. (The current year will be less than that — about 1 to 2 cents per share — and Hormel kept its full-year earnings estimate of $1.85-$1.95 per share).

China raised the tariffs in April in retaliation for higher U.S. tariffs on imported aluminum and steel.

Minnesota is the nation’s No. 3 pork-producing state, and so is particularly exposed to Chinese tariffs on food products. (China has also slapped counter-tariffs on soybeans, another big Minnesota agribusiness product.)

RELATED: Minnesota agriculture could be big loser in U.S.-China trade war

“We do see risk from tariffs, which could negatively impact fresh pork exports and the (international) segment’s results,” said Hormel CEO James Snee on a post-earnings call with analysts.

U.S. and Chinese officials are currently in talks over resolving the trade fight, but expectations are low, Bloomberg reports. Another round of tariffs and counter-tariffs went into effect Thursday, covering an additional $16 billion in goods.

Hormel’s quarterly sales of $2.36 billion slightly missed estimates of $2.38 billion; it’s the third consecutive quarter that Hormel has come in below revenue estimates, according to Reuters.

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