Tyson Foods Lifts FY16 Adj. EPS View As Q3 Results Top Estimates

(RTTNews) - Tyson Foods Inc. (TSN) on Monday lifted its adjusted earnings forecast for fiscal 2016 after posting higher third-quarter profit, above market estimates. Sales declined on weak volume and price, yet beat estimates.

In pre-market activity on the NYSE, Tyson Foods shares were gaining 4.33 percent to trade at $76.83.

For the third quarter, net income attributable to the company increased to $484 million or $1.25 per share from last year's $343 million or $0.83 per share. Adjusted earnings per share were $1.21 per share, compared to $0.80 in last year's third quarter.

On average, nine analysts polled by Thomson Reuters expected the company to earn $1.06 per share. Analysts' estimates typically exclude special items.

Operating income improved 36 percent to $767 million from $563 million a year ago.

The company noted that all operating segment results were in or above their normalized operating margin ranges, with the Chicken segment delivering a record 13.9 percent return on sales.

The company's sales for the quarter, meanwhile, fell 6.7 percent to $9.40 billion from $10.07 billion last year. Analysts were looking for sales of $9.33 billion. Volume declined 2.7 percent and average price dropped 4.1 percent.

Chicken sales volume decreased in the third quarter, while average sales price increased slightly as a result of sales mix changes.

For beef, sales volume increased due to an increase in live cattle processed as a result of higher fed cattle supplies, while average sales price were hurt by higher domestic availability of beef supplies.

Pork sales volume decreased, despite increased production, due to reduced inventory levels, while average sales price increased as demand for pork products outpaced the slight increase in live hog supplies.

Prepared Foods' sales volume increased with improved demand, while average sales price decreased primarily due to a decline in input costs.

Looking ahead, Chief Executive Officer Donnie Smith said, "We expect our high-level performance to continue and are raising full year fiscal 2016 earnings guidance. Following record earnings this year, we intend to build on our momentum to generate more growth in fiscal 2017."

For the year 2016, the company now expects reported earnings of $4.47-$4.57 per share and adjusted earnings of $4.40-$4.50 per share.

The company previously was expecting adjusted earnings for fiscal 2016 of $4.20-4.30 per share.

Sales are still expected to approximate $37 billion in fiscal 2016. For fiscal 2017, the company expects sales to increase 1 percent as it grow sales volume, partially offset by the impact of lower beef, pork and chicken prices.

In fiscal 2017, the company expects domestic protein production to increase approximately 2-3 percent from fiscal 2016 levels and moderate export growth.