May 7, 2013
Tyson's Q2 income drops 43% on struggles in beef, pork segments
During the second quarter, income at Tyson Foods, Inc. dropped 43% on margin compression in the beef segment and periods of supply and demand imbalance in the pork segment.
For the quarter ended March 30, the company had income of US$95 million, equal to US$0.26/share on the common stock, which compared with US$166 million, or US$0.44/share, in the same period a year ago. Sales for the quarter were US$8,419 million, up 2% from US$8,268 million.
"Our second quarter typically is our most challenging, and this quarter was no exception," said Donnie Smith, president and chief executive officer. "However, our business is structured to withstand adverse conditions, and we worked through the issues while positioning ourselves for what we believe will be a strong performance in the second half of the year."
Their chicken segment continued to emphasise operational efficiencies, upgrading their product mix and pricing to offset US$165 million in additional feed costs for the quarter. Their beef segment suffered margin compression as consumers opted for the relative value of chicken. While their pork segment faced periods of supply and demand imbalance after the loss of some export markets while soft demand in food service impacted their Prepared Foods segment, Smith said.
Tyson's chicken segment had operating income of US$78 million, down 48% from US$145 million during the same quarter of the previous year. The segment had sales of US$3,094 million, up 6% from US$2,911 million.
The beef segment sustained a loss of US$26 million, which compared with a loss of US$1 million during the same quarter of the previous year. The segment had sales of US$3,447, up 2% from US$3,369 million.
Operating income within the prepared foods was US$28 million, down 36% from US$44 million during the same quarter of the previous year. The segment had sales of US$803 million, down slightly from US$807 million.
For the six months ended March 30, the company as a whole saw income decline 17% to US$268 million, or US$0.74/share, which compared with US$322 million, or US$0.86/share, during the same period of the previous year. Sales for the six months were US$16,821 million, up 1% from US$16,597 million.
