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Weekly, Tyson Foods processes an average of more than 400,000 hogs. Tyson Foods

Tyson Foods optimistic about strong export environment for 2020

Given the magnitude of the losses in China’s pork supplies, Tyson Foods' president say the impact on global protein supply is likely to be a multi-year event.

Tyson Foods, Inc. released third quarter earnings Monday that were in line with analyst expectations, despite the pork segment being negatively affected by increased hog costs.

The Arkansas-based company reported a fiscal third quarter income of $676 million and earned an adjusted $1.47 per share. Revenue at $10.89 billion for the period was below forecasts, however, under pressure during the quarter due to increased hog costs. Chicken results were mixed, but Tyson did see strength in beef and prepared foods.

“Overall, third quarter earnings were in line with our expectations,” says Noel White, Tyson’s president and CEO. “Volume growth in our core retail lines continues to outpace other large food companies and the total food and beverage category, driven primarily by our new product innovation. Our Prepared Foods and Beef segments produced strong results in the quarter, while results in the Chicken segment were mixed, and the Pork segment was negatively affected by increased hog costs.

“The African Swine Fever outbreak continues to take its toll on hog supplies in Asia; however, we have not yet experienced significant benefits to our Pork, Chicken or Beef segments. Given the magnitude of the losses in China’s hog and pork supplies, the impending impact on global protein supply and demand fundamentals is likely to be a multi-year event.

“We are maintaining our guidance of adjusted earnings of $5.75-6.10 per share for fiscal 2019. With a strong export environment expected to continue into next year, we’re optimistic about the earnings potential for each of our segments in fiscal 2020.”

Tyson's pork sales volume increased for the third quarter of fiscal 2019 due to increased domestic availability of live hogs. Average sales price decreased for the first nine months of fiscal 2019 associated with excess supply, partially offset by increased average sales price in the third quarter of fiscal 2019 as live hog costs increased. Operating income decreased for the third quarter and first nine months of fiscal 2019 due to periods of compressed pork margins caused by excess domestic availability of pork and increased hog costs in the third quarter of fiscal 2019.

The company outlook expects industry hog supplies to increase approximately 2-3% in fiscal 2020 as compared to fiscal 2019. Additionally, the firm says it expects increased livestock costs in fiscal 2020 as compared to fiscal 2019 and the Pork segment's adjusted operating margin should exceed 6% in fiscal 2019 with similar or better results in fiscal 2020.

Source: Tyson Foods, which is solely responsible for the information provided, and wholly owns the information. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
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