Supply, demand fundamentals boost Tyson Foods
May 10, 2010
by Meat&Poultry Staff
SPRINGDALE, ARK. — A shrinking supply of chicken, pork and beef helped boost Tyson Foods, Inc.’s second-quarter earnings. Net income for the quarter ended April 3 was $159 million, equal to 42c per share on the common stock. The results are a marked improvement compared with the same period this past year when the company recorded a loss of $119 million.
Sales for the quarter were $6,916 million, up from $6,307 million in the same period a year ago.
“Our Beef and Pork segments were the main drivers with very strong profitability,” said Donnie Smith, president and chief executive officer. “Prepared Foods was within its normal range despite rising input costs. The Chicken segment showed significant improvement, due in part to our continued focus on operational efficiencies.
“While we did predict tightening domestic availability of protein would lead to stronger fundamentals, it happened sooner than expected. And although the second quarter was a great quarter for us, we think we’ll do even better the second half of the fiscal year as our operational performance continues to improve. We are very pleased with how our third quarter is going, and the summer grilling season is just getting started.”
Operating income for the Chicken division was $114 million for the quarter, an improvement when compared with the $46 million loss the company recorded during the second quarter of fiscal 2009. The company said division operating results improved due to yield, mix, live production performance, processing flexibility and reduced product movement between facilities.
For the rest of the year the company expects seasonal demand to improve as well as pricing, because of cold storage inventories and pullet placement trends that are down compared to previous years.
The company’s Beef business saw its operating income climb to $126 million during the second quarter. Division operating income during the same period of the previous year was $28 million. The company said it expected cattle supplies to decline approximately 1% during fiscal 2010.
Tyson Foods said it expects pork supplies to decline in the second half of fiscal 2010. Operating income for the quarter in the Pork division was $69 million, a $40 million increase compared with the same period of the previous year.
For the first half of fiscal 2010 the company posted net income of $319 million, or 84c per share, which compared with a loss of $221 million during the first half of fiscal 2009.
Sales for the first half of fiscal 2010 were $13,551 million, up 6% from $12,828 million during the same period of fiscal 2009.