Hormel Foods Corporation (NYSE: HRL) reported a 19% dip in earnings for the second quarter of 2020 due to higher costs and expenses. The top-line increased by 3.3% year-over-year backed by double-digit growth in sales from Jennie-O Turkey Store and single-digit growth in sales from Grocery Products and International & Other.
Even though the COVID-19 pandemic has caused a dramatic shift in consumer behavior, operational disruptions, and extreme volatility in raw material markets, the company remains financially strong and well-positioned to weather the pandemic. The company withdraws its guidance due to uncertainty regarding the impact of COVID-19.
In Q2, the company absorbed about $20 million in incremental supply chain costs primarily related to lower production volumes, employee bonuses, and enhanced safety measures in its production facilities. The company expects to absorb another $60-80 million in the second half of the year weighted primarily to Q3. The majority of the increased costs are expected to be temporary.
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