November 17, 2020
Tyson Foods report higher than projected Q4 profits, face higher feed costs and labour uncertainty
Tyson Foods fourth-quarter profits were higher than Wall Street projections, but the company faces increased livestock feed costs and COVID-19 related labour uncertainty as cases rise in the United States, Reuters reported.
The COVID-19 pandemic has resulted in lower demand for meat from restaurants and hotels, while COVID-19 outbreaks in meat plants earlier this year has forced slaughterhouses to shut down, which limited grocery store supplies.
Dean Banks, chief executive officer of Tyson Foods, said the company is now testing a sample of its workers every week to prevent plant shutdowns and ensure workers feel safe.
He said absentee workers remain high because of the pandemic, and will continue to be so until the first half of next year.
The company spend US$540 million in costs related to COVID-19 during the 2020 fiscal year. This included US$300 million "thank you bonuses" and other benefits for workers.
Tyson Foods expects costs to drop 39% next year as it would not need to purchase items such as temperature scanners.
Another challenge to one of the US' major meatpackers is the rising soybean and corn prices. Tyson Foods said overall grain costs are projected to be higher in 2021.
Tyson Foods' shares increased 3% in afternoon trading. It was down about 32% this year.
The company's beef and pork sales volumes was up in the fourth quarter, after dropping between January to September this year.
Total sales increased to US$11.46 billion in the quarter from US$10.88 billion in 2019. The company's net income was up 88% to US$692 million or US$1.90 per share.
According to IBES data from Refinitiv, Tyson Foods earned US$1.95 per share excluding items. Analysts projected a US$1.19 profit on average.