Revenues from beef were $4.31 billion which offset a sales volume decline of 3.9 percent due to reductions in live cattle processed. Average sales prices increased 6.9 percent on tight domestic supplies of beef products.
“Operating income decreased due to unfavorable market conditions associated with a decrease in supply of approximately 8 percent, which drove up fed cattle costs, export market disruptions, the relative value of competing proteins and increased operating costs,” the company said.
Sales in the pork segment plunged 28.2 percent to $1.21 billion due to the divestiture of the Heinhold Hog Markets business in the first quarter. Sales volumes retreated 4.8 percent to $1.207 billion, which compares to $1.77 billion in 2014.
“Live hog supplies increased, which drove down livestock cost and average sales price,” the company said in its earnings release. “Operating income decreased due to compressed pork margins during the third quarter of fiscal 2015 caused by a decline in exports and excess domestic availability of pork products.”
For the third quarter ended June 27, Tyson reported net income of $343 million, or 83 cents per share, up from $260 million, or 73 cents per share, in 2014. Sales for the most-recent quarter advanced 4 percent to 10.071 billion.
“Our beef business suffered from export market disruptions that had an $84 million impact on third quarter results, and we continue to see very high cattle costs at a time when product values and export issues are making it difficult to realize expected revenue levels in this spread business,” President and CEO Donnie Smith said in a statement.
“While we are pleased with the performance of our business overall, unless beef market conditions improve rapidly, we will not achieve our previous guidance of $3.30-$3.40 adjusted earnings per share,” he added. “As a result, we are modifying fiscal 2015 guidance to $3.10-$3.20 adjusted EPS.”
Look for more coverage of Tyson’s third quarter earnings results.