Hormel Foods Corp., which makes Spam canned ham, posted higher fourth-quarter earnings on Tuesday, slightly below Wall Street estimates, and said 2013 performance would be hurt by higher grain costs.
Hormel said its 2013 outlook also reflected volatile protein costs and processing margins. It said it planned to reduce harvest levels in its Jennie-O Turkey business and its pork business to reduce exposure to the volatility.
A drought in the Midwest earlier this year led to higher grain costs, making livestock feed more expensive. Many meat companies reduced the size of their herds as a result.
Hormel forecast fiscal 2013 earnings of $1.90 to $2.00 per share. Analysts were expecting $1.95 a share.
The company's shares fell 4.2 percent on Tuesday.
Hormel said net income rose to $132.6 million, or 49 cents per share, in the fourth quarter ended Oct. 28, from $117.3 million, or 43 cents per share, a year earlier.
Analysts on average were expecting 50 cents per share, according to Thomson Reuters I/B/E/S.
Net sales rose 3 percent to $2.17 billion, missing the analysts' average estimate of $2.23 billion, according to Thomson Reuters I/B/E/S. Sales by volume rose 2 percent.
Hormel shares fell $1.30, or about 4.2 percent, to $30 on the New York Stock Exchange.