Tyson Reports 11% Jump in Q1 Profits, Higher Sales Price and Improved Margins Boost Earnings (TSN)
NYSE: TSN) reported better than expected quarterly results on Friday as higher selling prices offset rising input (grains) costs arising due to severe draught in the Midwest region.
The Company’s outlook on full-year revenue also beat Street’s consensus forecast as the company expect increase in prices of cattle due to tight supplies.
The Midwest region experienced its worst draught in more than 50 years pushing price of feed corn to multi-year high. The Company said that extremely dry conditions impacted grain supplies, which in turn pushed up costs to feed cattle and hogs.
Dry conditions also resulted in lowest cattle supply in more than six decades.
Cargill Inc, which is United States’ one of the biggest processors of beef, for instance, said in January that it would shut its Plainview, Texas beef plant due to dwindling supplies of cattle.
Tyson on Friday said that it expects cattle supplies to fall by 2% to 3%.
The Company now expects full year revenue of about $35 billion. Analysts polled by Thomson Reuters were expecting revenue of $34.65 billion.
For the fiscal first quarter ended December 29, Tyson Foods’ reported profit of $173 million or 48 cents a share compared with earnings of $156 million or 42 cents a share, in the year earlier quarter.
Analysts were expecting earnings of 42 cents a share.
Sales during the quarter stood at $8.40 billion, up from $8.33 billion in the same period of last year, falling short of analysts’ forecast of $8.60 billion.
Chicken volumes, total physical units/quantity of chicken sold, fell 1.1% while beef volume slumped 10 % during the recently concluded quarter.
However, operating income in Tyson’s Chicken business soared to $107 million from $32 million in the same period of last year, thanks to 8.2% rise in average selling prices.
In the beef division, the operating income climbed to $46 million from $31 million, as average prices soared 12% during the quarter.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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