Tyson beats profit estimates, but trade spats threaten sales
Tyson food meat products are shown in this photo illustration. REUTERS/Mike Blake
REUTERS: Tyson Foods Inc , the No. 1 U.S. meat processor, beat analysts' quarterly profit estimates on Monday due to strong demand for beef, but executives warned that trade disputes were threatening the company's pork and chicken businesses.China is importing less U.S. pork after Beijing imposed tariffs on American shipments as part of an escalating trade war with Washington. Mexico and Canada also implemented levies, leading to oversupply and, subsequently, lower prices for meat in the U.S. market.
Lower prices for pork and beef were also reducing demand for Tyson's chicken, according to the company."Tariffs and trade concerns could continue to impact product pricing," Stewart Glendinning, Tyson's chief financial officer, told analysts on a conference call.Last week, Tyson cut its full-year profit forecast, citing uncertainty in trade policies and higher tariffs that have hurt domestic and export prices of meat.Operating income for the chicken business in the third quarter dropped to US$189 million, from US$294 million a year earlier, according to the company. Operating income for pork was US$67 million, down from US$136 million last year.
"We are clearly not satisfied with our results, particularly in chicken," Chief Executive Officer Tom Hayes said on the call.Sales increased in Tyson's beef business due to higher exports and increased supplies, according to the company. The unit had a record operating income of US$318 million in the quarter, up from US$147 million a year earlier, Tyson said."Our challenge really comes down to pork and chicken," Hayes said.Tyson shares jumped 3 percent to US$59.50 in morning trading, after the stock price fell to approach a two-year low last week.
Net income attributable to the company rose to US$541 million, or US$1.47 per share, in the quarter ended June 30, from US$447 million, or US$1.21 per share, a year earlier.Analysts on average had expected earnings of US$1.40 per share on revenue of US$10.28 billion, according to Thomson Reuters I/B/E/S.Excluding certain items, the company earned US$1.50 per share.The Springdale, Arkansas-based company said sales rose 2 percent to US$10.05 billion.(Additional reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila and Bernadette Baum)
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