Tyson Foods Inc. of Springdale said on Monday it received a subpoena from U.S. authorities last month that probably stems from allegations the company conspired for years with rivals to fix chicken prices.
Last year, U.S. poultry buyers sued Tyson, the nation’s biggest chicken processor, and other companies, claiming they had colluded since 2008 to reduce production in violation of antitrust laws. Tyson has denied the accusations.
The seller of Jimmy Dean sausage and Ball Park hot dogs received a subpoena from the U.S. Securities and Exchange Commission on Jan. 20 in connection with an investigation related to the company, according to documents filed with the SEC.
Previously: Price-Fixing Lawsuit Triggers More Litigation Against Tyson Foods
Tyson said it had limited information and was cooperating with the investigation, which it believes to be in an early stage.
Tyson CEO Tom Hayes declined to share details about the subpoena with reporters on a conference call after the company reported better-than-expected quarterly revenue and profit, helped by higher beef and pork exports and lower livestock costs.
Pilgrim’s Price, which was also sued for allegedly conspiring to fix chicken prices, said it had not received a subpoena from the SEC. The company has said it will fight the allegations.
Tyson shares (NYSE: TSN) were last down 1.5 percent at $64.44 after falling more than 3 percent in morning trading.
Commenting on the SEC subpoena, JPMorgan analyst Ken Goldman said “obviously it is not a positive” for Tyson shares.
The subpoena and strong results come as Hayes is getting his footing as Tyson’s new chief executive officer. He took over from former CEO Donnie Smith on Dec. 31.
“We wonder what exactly is being investigated and what risk this creates for Tyson,” RBC Capital Markets said about the subpoena.
In a separate lawsuit last month, chicken farmers sued Tyson and other top U.S. poultry companies for allegedly conspiring to depress their pay. Tyson has denied those allegations.
The company has sought to increase profit by selling more value-added items such as pre-seasoned products and heat-and-serve meals, which command higher margins than basic meats.
Net income attributable to Tyson rose to $593 million, or $1.59 per share, in the first quarter ended Dec. 31, from $461 million, or $1.15 per share, a year earlier.
Sales were $9.18 billion, up from $9.15 billion a year ago.
Analysts on average had expected earnings of $1.26 per share and revenue of $9.05 billion, according to Thomson Reuters I/B/E/S.
Tyson said earnings per share and operating margins for Tyson’s pork and beef units reached record highs in the quarter.
“Strong exports and big domestic supply created the perfect storm for beef and pork,” RBC Capital Markets said.
Tyson raised its forecast for full-year profit to $4.90 to $5.05 per share, up from its earlier forecast of $4.70 to $4.85.
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