May 8, 2012
Tyson Foods' second quarter profits has exceed analyst estimates, although the beef segment are affected, due to lean finely textured beef (LFTB) concerns among consumers, the company reveals.
The Springdale, Ark.-based processor posted net income of 44 cents a share for the period ended March 31, a nickel above the 39 cents expected by industry analysts. The figure is two cents higher than year-ago results and reflects stronger-than-expected margins for Tyson's pork business (8.4%) that offset the weakness in the company's beef operations. Overall sales rose 3.4% to US$8.3 billion.
Tyson President and CEO Donnie Smith told analysts this morning that the company believes that the fallout from LFTB will be relatively short-lived and that beef is already rebounding from a steep plunge in April.
He predicted demand for chicken should continue to grow through the summer, although he noted that the pace of the economic recovery would continue to affect sales, especially with gas prices hovering at around US$4 a gallon.
Tyson's chicken business, which posted a margin of 5%, is well positioned for the rest of the year with strong foodservice promotions for boneless breasts planned for summer and new chicken-based items for retail, Smith noted.
In response to a question, he also said he believes the company can reach earnings of US$2 a share for the entire fiscal year, even with slower growth in certain segments in the second half than in the first six months. "We have work to do, but yes, it's possible," said Smith.
In the near term, Tyson executives expect Memorial Day to exceed the disappointing results of a year ago, although Smith noted that gas prices peaked about six weeks earlier than in 2011 and may have diminished the cash that is available for Tyson products.
The company also plans to make growing its prepared foods business a significant part of its growth strategy. To that end, today it opened a converted plant in Council Bluffs, Iowa, that will make dry sausage and pepperoni, its fifth prepared foods plant specialising in pizza toppings.
