SPRINGDALE, Ark. – The ongoing outbreak of African Swine Fever (ASF) across China and the rest of Asia has the potential to transform global protein flows, and Tyson Foods Inc. is well-positioned to take advantage of any opportunities that may arise, executives with the company said while announcing second quarter results.
“Looking ahead, African Swine Fever has the potential to impact the global protein industry on a level that we have never experienced, and it is an event that will underscore the power of the Tyson business model,” said Noel White, Tyson president and CEO.
On Dec. 19, China confirmed the first-ever African Swine Fever outbreak in Guangdong province. As of April, China’s Ministry of Agriculture and Rural Affairs (MARA) has reported 118 ASF outbreaks detected across 28 provinces, autonomous regions and municipalities, according to the World Organization for Animal Health (OIE). Approximately 1 million pigs have been culled in an effort to halt further disease spread, OIE said.
Outbreaks also have been reported in Mongolia, Vietnam and Cambodia. ASF is harmless to humans, but deadly to swine. The virus is transmissible via contaminated animal feed, premises, vehicles, equipment and clothing.
“While Tyson’s diversity across segments provides stability and puts us in a position to capitalize when opportunities arise, all proteins could see a benefit,” White explained. “A worldwide decrease in pork supply would offer significant upside to our pork business, while also lifting the chicken and beef businesses as substitutes and increasing raw material costs in our prepared foods business.”
White said that Tyson’s Beef and Pork segments delivered solid results during the second quarter, while the Chicken segment was poised for improvement.
For the second quarter ended March 30, 2019, Tyson Foods net income attributable to the company was $426 million, or $1.17 per share, compared with $315 million, or $0.85 per share in the second quarter ended March 31, 2018.
Sales for the quarter totaled $10,443 million, compared with $9,773 million in the year-ago period.
The company’s Beef segment gained in the quarter with sales of $3,884 million compared with $3,681 million reported in the second quarter a year ago.
Sales in the Pork business declined to $1,172 million from $1,265 million last year.
The Chicken segment reported strong sales of $3,407 million compared with $2,959 million in the second quarter of 2018.
Finally, sales in Tyson’s Prepared Food segment eased to $2,027 million from $2,147 reported in the year-ago quarter.
Looking ahead to the current fiscal year, the company maintained adjusted earnings per share guidance of $5.75-$6.10. However, forecasts for the current fiscal year do not include any potential effects from ASF, White noted, because the company lacks “…clarity on when the impact might occur or what the magnitude could be.
“To date, pork pricing hasn’t kept pace with increased hog costs, leading us to believe any positive ASF impact would occur in late fiscal 2019 into fiscal 2020 and beyond,” he continued. “For these reasons, we are maintaining our guidance for fiscal 2019 in the range of $5.75-6.10 adjusted earnings per share, and we will stay focused on the long-term by growing our business on the strength of our leading brands and our diversified business model.”
For the first six months of fiscal year 2019, sales were $20,636 million, compared with $20,002 million reported in the first six months of fiscal year 2018.
Net income for the first six months was $977 million, or $2.67 per share, compared with $1,946 million, or $5.25 per share.