Tyson Foods' 2Q Profit Down 43 Percent

by Lance Turner  on Monday, May. 6, 2013 7:19 am  

Tyson Foods Inc. headquarters in Springdale.

Tyson Foods Inc. of Springdale on Monday reported second-quarter net income of $94 million, down 43 percent from the $166 million it reported in the same quarter last year.

The meat processor said earnings per share attributable to the company fell to 26 cents from 44 cents last year. On an adjusted basis, earnings per share reached 36 cents. Analysts expected earnings per share of about 45 cents.

Shares of Tyson Foods (NYSE: TSN) fell in pre-market trading after the company issued its report.

"Our second quarter typically is our most challenging, and this quarter was no exception," Donnie SmithTyson Foods' president and CEO, said in a news release. "However, our business is structured to withstand adverse conditions, and we worked through the issues while positioning ourselves for what we believe will be a strong performance in the second half of the year."

"Our [earnings per share] for the quarter wasn't at the level we'd like, but on an adjusted basis, we're about where we were at this point last year," Smith said. "I'm still confident our results for 2013 will be better than 2012."

In all, revenue reached $8.4 billion, up about 2 percent from the same quarter last year. Two of the company's four main food segments reported sales gains.

Chicken sales reached $3 billion, up from $2.9 billion in the same quarter last year. Beef sales rose slightly, hitting $3.44 billion from $3.36 billion. The pork and prepared food segments were down slightly.

"In our chicken segment, we continued to emphasize operational efficiencies, upgrading our product mix and pricing to offset $165 million in additional feed costs for the quarter," Smith said. "Our beef segment suffered margin compression as consumers opted for the relative value of chicken. Our pork segment faced periods of supply and demand imbalance after the loss of some export markets, while soft demand in food service impacted our prepared foods segment."

Tyson growth in China has been stalled by customer fears of a bird flu outbreak. Tyson has also spent on capital improvements like company-owned farms and chicken houses. Smith said the company's investment in bio-security measures and track record of clean products should help alleviate consumer concerns in China and said Tyson's setback is "only temporary."

"We're building chicken houses as fast as we can. That, frankly, is our bottle neck," Smith said. "Our profitability will improve dramatically when we’re running plants with company-owned birds."

Business is growing in other international markets like Mexico and Brazil, Smith said.

Looking ahead, Tyson is expecting a stronger second half of 2013. The company said fiscal 2013 sales will reach about $34.5 billion, "mostly resulting from price increases related to expected decreases in domestic availability of certain protein and increased raw material costs."

Smith said the compnay will continue to grow its hand-held, gluten free and organic product lines.

"We’re still on track," Smith said. "… Tyson foods is still on pace for another productive year."

(Chris Bahn contributed to this report.)

 

 

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