Tyson Foods Profit Misses View; To Sell Mexico, Brazil Poultry For $575 Mln

(RTTNews) - Meat products maker Tyson Foods, Inc. (TSN) reported Monday higher profit in its third quarter with improved sales performance. Adjusted earnings per share missed analysts' estimates. Looking ahead, the company projects sales in fiscal 2014 and 2015 to be higher than market view.

Separately, Tyson Foods said it has reached a definitive agreement with JBS SA (JBSAY) to sell its poultry businesses in Mexico and Brazil for $575 million in cash.

For the third quarter, Tyson Foods' net income attributable to the company rose to $260 million from $249 million in the year ago quarter. On a per share basis, net income was $0.73, up from $0.68 in the same quarter last year.

Adjusted net income per share, which excluded certain items, grew to $0.75 from $0.68 in the prior year quarter. On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $0.78 per share for the quarter. Analysts' estimates typically exclude special items.

Sales increased 11 percent to $9.682 billion from $8.731 billion in the previous year. Wall Street analysts' revenue consensus was $9.47 billion.

Gross profit margin declined to 6.6 percent from 7.8 percent in the prior year.

Tyson Foods President and Chief Executive Officer Donnie Smith noted that the overall results were in line with expectations, and the Chicken segment could have performed better had it not been for isolated issues at a couple of plants.

Looking ahead, the company expects 2014 sales to approximate $38 billion. Wall Street expects revenues of $36.85 billion.

For fiscal 2015, the company projects strong earnings and operating income and at least 10 percent growth in earnings per share. Sales are projected to approximate $42 billion as it integrates Hillshire Brands and continue to execute its strategy of accelerating growth in domestic value-added chicken sales and Prepared Food sales. Wall Street expect revenues of $38.75 billion for fiscal 2015.

Regarding the sale of Mexico and Brazilian Poultry Businesses, Tyson Foods said its officials currently expect the sale to be completed by the end of 2014, subject to regulatory approval.

Tyson Foods' Mexican business, known as Tyson de México, will be acquired through Pilgrim's Pride, whose majority owner is JBS USA Holdings, Inc., a wholly owned subsidiary of JBS SA. The Brazilian business, known as Tyson do Brasil, is to be acquired through JBS Foods, also a wholly owned subsidiary of JBS SA.

The Mexican business has three plants and employs more than 5,400 team members in its plants, offices and seven distribution centers. The Brazil operations involves three fully integrated production plants, and employs 5,000 team members.

JBS and Pilgrim's Pride currently expect to maintain all the operations working to capacity with the existing workforce and to maintain all labor contracts in both countries.

As part of its prepared foods strategy, Tyson Foods on Friday announced the closure of three plants to improve capacity utilization and streamline cost structure.

Smith added, "Although these are good businesses with great team members, we haven't had the necessary scale to gain leading share positions in these markets. In the short term, we'll use the sale proceeds to pay down debt associated with our acquisition of Hillshire Brands. Longer term, we remain committed to our international business and will continue to explore opportunities to extend our international presence."

Tyson Foods added that it intends to remain focused on growing its poultry operations in Asia, mainly in China and India. Combined, these Asian operations employ approximately 5,000 people.

On the NYSE, Tyson Foods shares closed Friday's trading at $39.54, down $0.23 or 0.58 percent.