Tyson income declines 61% in quarter on charge
SPRINGDALE, Ark. — Disappointing results in the beef and pork segments, rising costs and soft domestic demand led to a 61 percent decline in income at Tyson Foods, Inc. during the third quarter.
For the quarter ended June 30, the company had income of $76 million, equal to 21 cents per share on the common stock, which compared with income of $196 million, or 53 cents per share, during the same quarter of the previous year. The most recent quarter included a charge for the early extinguishment of debt totaling $167 million, or 29 cents per share. Excluding the charge, third-quarter EPS was 50 cents.
The company had sales of $8,308 million during the quarter, up 1 percent from $8,247 million during the same quarter of the previous year.
“We produced solid results in our fiscal third quarter despite softer-than-expected domestic demand for protein,” said Donnie Smith, president and chief executive officer of Tyson Foods. “I am especially pleased with the performance of our Chicken and Prepared Foods segments. Our Beef and Pork segments have been operating in very difficult market conditions that will result in our earnings for fiscal 2012 coming in lower than we previously projected.
“Grain costs have been increasing significantly and rapidly, largely as a result of the on-going US drought. While we ultimately expect to pass along rising input costs, these costs, coupled with continued soft demand, are likely to pressure earnings in 2013. However, we still anticipate solid earnings for the year, and we are performing well during challenging circumstances. With our strong balance sheet, customer relationships, new product development capabilities, and efficient operations, we believe Tyson Foods is in the best position in our industry to succeed now and in the future.”
The Chicken segment had an operating income of $153 million, up sharply from $28 million during the same quarter of the previous year. Sales for the segment were $2,902 million, up 4 percent from $2,800 million during the same quarter of the previous year.
The Beef segment had an operating income of $71 million, down 49 percent from $140 million during the same quarter of the previous year. The segment had sales of $3,487 million, down narrowly from $3,515 million.
Operating income within the Pork segment was $69 million, down 44 percent from $124 million during the same quarter of the previous year. The segment had sales of $1,344 million, down 5 percent from $1,408 million during the same quarter of the previous year.
For the nine months ended June 30, the company as a whole sustained a 39 percent decline in income to $398 million, or $1.11 per share, which compared with income of $653 million, or $1.77 per share, in the same period a year ago.
“We’re often faced with challenges in our business, but our strategy will allow us to manage through trying times for continued success,” Smith said. “We are focused on growing our prepared foods, international poultry and value-added poultry businesses. We can’t make it rain, but we can execute against our strategy by producing high-quality foods using innovative and cost effective processes. It’s tough right now, but I’m confident we will come out of this in even better shape than we are in today.”