Tyson Foods Inc. of Springdale reported a decline in second-quarter profits Monday, but CEO Tom Hayes expressed optimism for the long-term profitability of the food processing company.
Tyson Foods (NYSE: TSN) said second-quarter revenue was $9.08 billion, a drop from the $9.17 billion it reported in the same quarter a year ago. Quarterly income was $340 million, a 21.3 percent decrease from the $432 million it reported a year ago.
Earnings per share was 92 cents, down from $1.10 per share it reported in the same quarter a year ago.
Hayes said the Tyson’s first quarter was strong and it was best to compare the company’s financials by half-year rather than quarterly because of the “seasonal changes” of the industry.
“We concluded a record first half in fiscal ’17, and we’re off to a strong start in the second half,” Hayes said. “Q1 was very strong, our best quarter in company history. We knew that Q2 would be a challenge, and it was due to typical seasonality and a late Easter.”
The beef and pork segments saw drops in volume sales but improvements in operating income. Beef’s operating income for the quarter was $126 million, up from $46 million a year ago, while pork’s operating income was $141 million, up from $140 million.
“These commodity businesses are great contributors because of the cash they generate, the raw materials they supply for our prepared foods businesses and the total protein portfolio we’re able to offer our customers,” Hayes said.
Chicken segment’s operating income dropped to $233 million from $347 million. Hayes said Tyson had about $23 million in costs as a result of fires at two chicken facilities this quarter.
The Prepared Foods segment had operating income of $87 million, down from $197 million in the same quarter a year ago. Hayes said Prepared Foods is a promising growth segment but it is still in the “Fix It” phase for the company.
“We continue to see strong growth in some areas, but others that need work,” Hayes said. “We’ll accelerate profitable growth with a very focused, fix-and-grow approach.”
Tyson Foods announced in April that it planned to spend $4.2 billion to purchase AdvancePierre Foods Holdings Inc. of Cincinnati, which sells packaged sandwiches.
The announcement came shortly after Tyson said it would explore the sale of three brands: Sara Lee Frozen Bakery, Kettle and Van’s. The AdvancePierre acquisition is scheduled to be finalized in the third quarter.
Hayes said he expected Tyson to save $200 in synergies from the acquisition over three years.
“We wrapped up an excellent first half at Tyson,” Hayes said. “We feel the second half is off to a solid start. We feel great about where we are now. We’re well positioned for fiscal ’18.”
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