May 9, 2014

 

 

Tyson Foods, Inc. reported a profit for the second quarter that more than doubled from last year, boosted by higher revenues and improved margins amid increased volume and pricing.

 

However, earnings per share for the quarter missed analysts' expectations. Looking ahead, the company raised its sales outlook for fiscal 2014.

 

Donnie Smith, president and chief executive officer of Tyson Foods said, "Our second quarter is usually our most challenging. We had a lot to overcome, including a harsher than normal winter, but I'm satisfied with the results."

 

Tyson's net income for the second quarter was US$213 million or US$0.60 per share, up from US$95 million or US$0.26 per share in the prior-year quarter. The prior-year quarter's results included a currency translation adjustment gain of US$0.05 per share and impairment of non-core assets in China of US$0.15 per share.

 

Adjusted earnings per share for the latest quarter were US$0.60, compared to US$0.36 per share in the year-ago period. On average, 10 analysts polled by Thomson Reuters expected the company to report earnings of US$0.63 per share for the quarter. Analysts' estimates typically exclude special items.

 

Sales for the quarter increased 8% to US$9.03 billion from US$8.38 billion in the same quarter last year, surpassing the US$9 billion mark for the first time. Analysts' had a consensus revenue estimate for the quarter of US$8.84 billion. Total sales volume for the quarter grew 2.8% and average prices increased 5.2%.

 

Chicken sales for the quarter grew 4% to US$2.84 billion, with volume growth of 4.3%, but average price edged down 0.3%. Beef sales increased 11% to US$3.83 billion, with volume decline of 1.8% and average price increase of 13%.

 

Pork sales improved 14% to US$1.49 billion, with average price increase of 0.7% and volume increase of 12.5%. Prepared Foods sales grew 7% to US$861 million, with volume growth of 8.1% and average price decrease of 0.9%.

 

International segment sales edged down slightly to US$328 million, while volume increase of 13.8% and average price decrease of 12.9%. During the latest quarter, the company began reporting its International operation as a separate segment, which was previously included in its Chicken segment.

 

The company's gross margin improved 170 basis points from last year to 7.2%, while operating margin expanded 120 basis points to 4%. Margins improved in chicken, beef and pork segments, partially offset by a decline in prepared foods and international segments.

 

Looking ahead to fiscal 2014, Tyson Foods now expects sales of about US$37 billion, up from the prior forecast for sales of about US$36 billion.

 

The company now projects full-year capital expenditures of about US$650 million to US$700 million, down from the prior forecast of US$700 million.