Tyson profit misses on weak U.S. meat demand

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Tyson Foods Inc reported weaker-than-expected quarterly sales and earnings and lowered its full-year outlook due to weak U.S. demand for meat.

But the company on Monday also said its chicken business would remain profitable next year, even as the worst drought in a half-century pushes up corn prices.

Tyson shares were fractionally lower in premarket trading after initially falling 4 percent following the earnings news.

The company's beef and pork segments have been experiencing "very difficult market conditions" that will result in lower-than-expected 2012 profit, Chief Executive Donnie Smith said, adding that rising grain costs would hurt earnings next year.

"While we ultimately expect to pass along rising input costs, these costs, coupled with continued soft demand, are likely to pressure earnings in 2013," Smith said.

He highlighted better performance in Tyson's chicken and prepared foods segments, businesses the company has been focused on growing.

Despite higher grain costs, Tyson expects its chicken business to be profitable next year, something that J.P. Morgan analyst Ken Goldman said was a "significant upside surprise" to his expectations.

"We think Tyson's optimism here should be interpreted as the most important part of the release, and a positive for the stock," Goldman said in a research note.

Tyson said its beef segment should remain profitable, but margins could be below the typical range. Margins in the pork segment should be at or above the normal range, while prepared foods' margins should be in the normal range, it said.

The company did not say what was hurting demand for meat, but U.S. shoppers have remained frugal in a still-recovering economy.

Also, domestic demand for ground beef took a hit in the spring following a controversy over a filler product critics called "pink slime."


Tyson said net profit tumbled to $76 million, or 21 cents per share, for the fiscal third quarter ended June 30, from $196 million, or 51 cents per share, a year earlier.

Excluding a $167 million charge for the early extinguishment of debt, earnings were 50 cents per share. On that basis, analysts on average were expecting 54 cents, according to Thomson Reuters I/B/E/S.

Sales rose to $8.31 billion from $8.25 billion a year earlier. Analysts were expecting $8.72 billion.

The company said it now expects 2012 sales of $33 billion, $1 billion less than its previous estimate. It expects 2013 sales of $35 billion due to price increases related to a likely decline in the U.S. meat supply and higher raw material costs.

Analysts were expecting sales of $34.02 billion for 2012 and $35.40 billion for 2013.

The company also lowered its forecast for capital spending this year, saying its ongoing projects will not be completed.

Tyson shares fell 4 cents to $15.36 in premarket trading, down from Friday's close at $15.40 on the New York Stock Exchange.

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Rochester, MN  |  August, 07, 2012 at 10:04 AM

Animal Agriculture is destroying people's health, the planet and are evil to the animals that are used for food:( Does your Soul Approve? Mercy For Animals http://www.meatvideo.com/

California  |  August, 07, 2012 at 11:21 AM


earth  |  August, 07, 2012 at 07:11 PM

Our actions are finally making an impact where it matters most - right in their wallets! Yay!! Please God, I pray that I will see an end to the suffering, cruelty and murder of innocent animals in my lifetime - Amen.

August, 08, 2012 at 07:36 AM

It is going to continue to drop. We are damaging our health, the environment and by buying grains from poor countries to feed livestock we are slapping the tear stained face of a hungry child. We have enough food for everyones need but not enough for everyones greed.

usa  |  August, 09, 2012 at 02:27 PM

amen to an end of suffering, cruelty and abuse of innocent animals...thank you lord...

Washington  |  August, 10, 2012 at 01:33 PM

People are becoming educated to the fact that high animal protein consumption leads to all kinds of diseases. The more qeducated they become the less meat they will consume. Factory farming is seriously compromising the health of Americans & the cruelty factor of factory farming is shameful. Hopefully with growing consumer awareness we will see the end of factory farming in our lifetimes.

Linda Bellavia    
San Francisco, CA  |  August, 23, 2012 at 09:30 PM

I pray for the very end to the horrific sufferring of poor, innocent, helpless animals! They so desperately need and deserve our respect, heartfelt love, and protection from all evils! We must learn to live and to die, completely "Cruelty Free!"

Daved Waxman    
Maine  |  August, 24, 2012 at 08:00 AM

My dream of dreams is to see every animal producing meat and dairy business and industry to go permanently out of business forever. Go VEGCON pronounced veegcon which means VEGetarian CONscious. VEGCONISM is the "Conscious Choice"


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