Tyson Foods Q2 Profit More Than Doubles, But Misses View; Lifts Sales Outlook

(RTTNews) - Meat products provider Tyson Foods, Inc. (TSN) on Monday reported a profit for the second quarter that more than doubled from last year, boosted by higher revenues and improved margins amid increased volume and pricing. However, earnings per share for the quarter missed analysts' expectations. Looking ahead, the company raised its sales outlook for fiscal 2014.

Donnie Smith, president and chief executive officer of Tyson Foods said, "Our second quarter is usually our most challenging. We had a lot to overcome, including a harsher than normal winter, but I'm satisfied with the results."

The Springdale, Arkansas-based company's net income for the second quarter was $213 million or $0.60 per share, up from $95 million or $0.26 per share in the prior-year quarter. The prior-year quarter's results included a currency translation adjustment gain of $0.05 per share and impairment of non-core assets in China of $0.15 per share.

Adjusted earnings per share for the latest quarter were $0.60, compared to $0.36 per share in the year-ago period. On average, 10 analysts polled by Thomson Reuters expected the company to report earnings of $0.63 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter increased 8 percent to $9.03 billion from $8.38 billion in the same quarter last year, surpassing the $9 billion mark for the first time. Analysts' had a consensus revenue estimate for the quarter of $8.84 billion.

Total sales volume for the quarter grew 2.8 percent and average prices increased 5.2 percent.

Chicken sales for the quarter grew 4 percent to $2.84 billion, with volume growth of 4.3 percent, but average price edged down 0.3 percent. Beef sales increased 11 percent to $3.83 billion, with volume decline of 1.8 percent and average price increase of 13 percent.

Pork sales improved 14 percent to $1.49 billion, with average price increase of 0.7 percent and volume increase of 12.5 percent. Prepared Foods sales grew 7 percent to $861 million, with volume growth of 8.1 percent and average price decrease of 0.9 percent.

International segment sales edged down slightly to $328 million, while volume increase of 13.8 percent and average price decrease of 12.9 percent. During the latest quarter, the company began reporting its International operation as a separate segment, which was previously included in its Chicken segment.

The company's gross margin improved 170 basis points from last year to 7.2 percent, while operating margin expanded 120 basis points to 4 percent. Margins improved in chicken, beef and pork segments, partially offset by a decline in prepared foods and international segments.

Looking ahead to fiscal 2014, Tyson Foods now expects sales of about $37 billion, up from the prior forecast for sales of about $36 billion.

Smith said, "I'm still confident in my expectations for the year that we will achieve our goal of 6-8% sales growth in value-added products while generating at least $2.78 earnings per share."

Street expects the company to report earnings of $2.92 per share for the year on sales of $35.94 billion.

The company now projects full-year capital expenditures of about $650 million to $700 million, down from the prior forecast of $700 million.

TSN closed Friday's trading at $42.65. In Monday's pre-market, the stock is up $0.75 or 1.77 percent to $43.16.