SPRINGDALE, Ark. – During a fiscal quarter when one of its highest-volume beef plants was closed by a fire and its chicken processing operations continued to face challenges, Tyson Foods Inc. announced on Sept. 3, it was revising its 2019 adjusted earnings guidance range to $5.30 to $5.70 per share for the fourth quarter.
Less than a month ago, the company reported its Q3 results, referencing the headwinds facing the company for the remainder of the year, but maintained its EPS guidance in the range of $5.75 to $6.10. The company said short-term challenges pressuring Tyson’s earnings for Q4 also include volatility in the commodity market, implementing food safety initiatives and “margin compression related to a reversal of a gain on mark to market grain derivatives recognized in our third quarter.”
Noel White, president and CEO said, “The discrete challenges we’ve encountered this quarter now lead us to believe we will fall short of our previously stated guidance, but our outlook for fiscal 2020 remains positive as we believe some of the challenges we’re experiencing are not expected to repeat, and we’re expecting more favorable market conditions as well.”
White referenced the challenges in the company’s Chicken business segment in August, saying there is work to be done at a handful of plants where improvements are needed.
“We know specifically which plants are opportunities for us,” he told analysts during an Aug. 5 conference call. “We know what the causes are, and they are in the process of being addressed. We know the root cause and we have a team that is fully dedicated to get them corrected as quickly as possible.”
Looking forward, White said there are plenty of reasons for optimism.
“Our portfolio is structurally sound and generating strong sales volumes. Our volumes are strong in the back-to-school season while our case-ready beef and pork business continues to grow. Our international business is exceeding expectations as our legacy business outperforms the prior year and we continue to integrate Keystone and the newly acquired Thai and European assets.
“Our diversified portfolio is uniquely suited to respond to dynamic and challenging market conditions, and we continue to expect better performance in fiscal 2020. We’re very optimistic about our long-term potential as we focus on prepared foods growth, international growth and serving our customers.”