New York: Tyson Foods Inc reported weaker-than-expected quarterly profit as shoppers and restaurants switched to cheaper chicken from beef, and the company cut its full-year sales forecast, sending shares down more than five percent.
Still, executives at Tyson, the largest US meat processor, stuck by their forecast for higher adjusted profit this year, saying results should improve over the balance of the fiscal year due to lower feed costs and robust chicken demand, which is pushing up prices per pound.
Chicken volumes rose just 0.1 percent in the second quarter ended March 30, but beef volumes fell 3.9 percent, pork was down 2.2 percent and packaged foods dipped 0.8 percent, it said yesterday.
Gross margins declined to 4.85 percent from 6.47 percent a year earlier. “Our beef segment suffered margin compression as consumers opted for the relative value of chicken,” Chief Executive Donnie Smith said in a statement.
The company and its competitors are still feeling the effects of the worst drought in 50 years last year in the US Midwest that pushed up feed costs and reduced cattle supplies.
Tyson stock was off 5.2 percent, or $1.29, to $23.64, while rival Smithfield Foods Inc fell 0.8 percent, or 21 cents, to $25.41.
Tyson trimmed its fiscal 2013 sales forecast to $34.5bn from $35bn after second-quarter net income fell 43 percent to $95m, or 26 cents per share.
On an adjusted basis, the company earned 36 cents per share, 9 cents short of analysts’ average estimate, as complied by Thomson Reuters. Quarterly sales were up nearly two percent to $8.42bn, but also missed analysts’ estimate of $8.58bn.
Agribusiness group Cargill Inc, another big beef producer, said last month its quarterly earnings fell 42 percent as the lingering effects of the US drought affected both its meat and grain operations.
Tyson said its international operations have improved significantly from a year ago, driven by strength in Mexico and Brazil. And, while the new bird flu outbreak in China has devastated demand, Tyson expects to eventually benefit as shoppers and restaurants reject small independent producers and seek out suppliers with better food safety records.
Reuters
