Highly pathogenic avian influenza (HPAI) is creating problems with a reduced supply of turkeys, and will have a subsequent negative impact on plant operations for Jennie-O Turkey Store, the company stated.

Jeffrey M. Ettinger, chairman of the board, president and CEO of Hormel Foods, the parent company of Jennie-O Turkey Store, cautioned investors that the avian influenza outbreaks will likely put pressure on the company’s earnings during the second half of fiscal year 2015.

H5N2 avian influenza has been detected at multiple turkey farms that supply Jennie-O Turkey Store, resulting in the loss of affected flocks and temporary quarantine of farms in the area until a full cleaning process is completed. Jennie-O Turkey Store is managing the occurrences in full cooperation with the USDA Animal and Plant Health Inspection Service (APHIS) and state agency officials in Minnesota and Wisconsin. The company is also collaborating closely with industry associations and other poultry companies in the region to ensure food safety and employee safety.


“We are experiencing significant challenges in our turkey supply chain due to the recent HPAI outbreaks in Minnesota and Wisconsin,” stated Ettinger. “While Jennie-O Turkey Store has delivered strong financial performance so far in the first half, tight meat supplies and operational challenges will pressure earnings in the back half of our fiscal year. We are currently maintaining our fiscal 2015 non-GAAP1 adjusted earnings guidance range ... with the assumption that farm outbreak occurrences will decline as the weather improves, but expect turkey supply challenges to push our full year earnings toward the lower end of this range.”

Ettinger added that he did expect avian influenza’s financial impact on the multi-protein company to partially offset by favorable hog prices benefitting Hormel’s Refrigerated Foods segment and portions of the Grocery Products segment.” 

Hormel Foods will reveal more details on avian influenza’s financial impact on the company on May 20, when the company releases its second quarter financial report.