Tyson Foods' 3Q Net Income Beats Expectations

by Lance Turner  on Monday, Aug. 7, 2017 6:50 am   2 min read

Tyson Foods Inc. of Springdale on Monday reported net income of $447 million, down 7.6 percent from $484 million in the same quarter last year, but earnings per share beat analysts' estimates and CEO Tom Hayes said the company was on its way to a record year. 

Net income per share attributable to Tyson, which doesn't include $1 million in income attributable to noncontrolling interests, came to $1.21 per share, down from $1.25 per share in the same quarter last year. But that figure was ahead of analysts' estimate of $1.18, according to Thomson Reuters.

Revenue beat expectations too. Sales were $9.85 billion, up 4.8 percent from $9.40 billion, and ahead of the $9.48 billion analysts called for.

Shares of Tyson Foods (NYSE: TSN) rose on the news. At 11:46 a.m., shares were trading at $66.32, up 4.8 percent.

"Our team delivered solid results in our third quarter with three of four segments on a GAAP basis and all four segments on an adjusted basis achieving operating margins in or above their normalized ranges," CEO Tom Hayes said in a news release. "Our total net sales grew 4.8 percent compared to third quarter of 2016, and every segment delivered volume growth behind a strong start to grilling season and new product innovation."

Hayes said gains in the company's beef and pork segments continued generating cash to fuel investments in its value-added chicken and prepared foods businesses. And said the integration of AdvancePierre Foods, which Tyson purchased earlier this year, is expected to create cumulative net synergies exceeding $200 million within three years.

"We're nearing the end of a record year of earnings per share and operating income, and we're looking ahead to fiscal 2018 with great enthusiasm," Hayes said. "We anticipate delivering another record year through differentiated capabilities, exceptionally strong brands and disciplined execution."

Exports played a key roll in boosting the company's beef and pork divisions. 

Beef sales rose 6 percent to $4 billion; operating income rose 61 percent to $147 million. Tyson attributed an increase in sales volume to improved availability of cattle supply, stronger domestic demand for beef and increased exports. Average sales prices improved over a nine-week period.

Pork sales rose by 4 percent to $1.3 billion; operating income rose 11 percent to $136 million. The company cited "strong demand" for pork products and increased exports. Average sales price increased for pork, as well, and the company said demand for our pork and strong exports outpaced the increase in live hog supplies. 

Chicken sales rose by 5 percent to $2.8 billion; operating income fell 23 percent to $294 million. Sales volume rose but was partially offset by disruptions from fires at two of poultry plants and a decline in rendered product sales. 

Prepared foods sales rose by 8 percent to $1.9 billion; operating income fell by 12 percent to $174 million. Sales volume increased "primarily as the result of incremental volumes from the AdvancePierre acquisition, partially offset by declines in foodservice," the company said. Average sales price increased amid a better product mix and higher input costs. 

Looking ahead, the company said it expects adjusted fiscal 2017 earnings per share of between $4.95-$5.05, up 13 percent increase from fiscal 2016. It said fiscal 2017 should be above $38 billion as sales volumes grow in each segment. 

For fiscal 2018, Tyson expects sales to grow to about $41 billion. 



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