Tyson Reports Fall in 4th Q Profit
Processed foods manufacturer, Tyson Foods Inc. (NYSE:TSN) reported a fall in its fourth quarter net income, because of the increased costs of grains offsetting revenue increases in other areas.
Tyson foods also reported a decline in the operating income of $3 million for beef and around $12 million for pork. Operating income from the chicken processing unit reported the largest tumble of $223 million. Last year an operating income of around $141 million, which this year turned into an operating loss of $82 million.
The Chief Executive Officer of Tyson Foods, Donnie Smith said on Monday that the chicken supplies are set to fall by next year, which will lead to increase in prices of Chicken and a chance for Tyson to increase overall profits.
Smith told reporters that they are predicting progressive improvements through the year. However he did not give an indication about when will the chicken unit come back into profit, only saying that it will be months before the unit reports profit. He said that according to his predictions in the first quarter of next year all the sectors are set to report a profit.
In the fourth fiscal quarter, Tyson reported a $97 million or 26 cents per every share net income. Last year in the final quarter Tyson had reported a net income of $213.5 million. Analysts were predicting a net income of 31 cents per share, were disappointed by the results. The revenue increased by 13 percent or to around $8.4 billion.
The prices of all its products were increased sharply to overcome the cost increases for raw materials. The price of chicken increased by 5 percent, beef jumped by 19 percent followed by pork by up to 13 percent. The increase in prices did not help raise the company’s profit margins. The fourth quarter income fell by 2 percent, compared to a 5.3 percent rise last year in the same quarter.
Net income for this year was a little lower than last year, mostly because of the $675 million increase in the costs of raw ingredients and feed. Feed includes beans and grains, which are required to raise chickens, cattle and pigs. The cost of corn was the highest since corn prices have begun recording, which led to decrease in net income.
The meat supplies across United States are set to fall next year by 3 to 4 percent, giving Tyson Food to increase costs and improve profits. The shares of Tyson were down 1.54 percent at 1 pm on the New York stock exchange.
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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. |