Meat products producer Tyson Foods, Inc. (TSN) reported Monday a profit for the second quarter that declined from last year, hurt by rising feed costs and a significant impairment charge related to its Chinese operations.
Both earnings per share and quarterly revenues missed analysts' expectations. The company also trimmed its revenue guidance for the full-year 2013, but expects results for 2013 to be better than 2012 aided by a strong second half of the year.
"Our second quarter typically is our most challenging, and this quarter was no exception. However, our business is structured to withstand adverse conditions, and we worked through the issues while positioning ourselves for what we believe will be a strong performance in the second half of the year," President and CEO Donnie Smith said in a statement.
The Springdale, Arkansas-based company reported net income of $95 million or $0.26 per share for the second quarter, lower than $166 million or $0.44 per share in the prior-year quarter.
Excluding items, adjusted net income for the latest quarter was $0.36 per share.
On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.45 per share for the quarter. Analysts' estimates typically exclude special items.
Sales for the quarter increased 1.8 percent to $8.42 billion from $8.27 billion in the same quarter last year, but missed ten Wall Street analysts' consensus estimate of $8.58 billion.
"In our Chicken segment, we continued to emphasize operational efficiencies, upgrading our product mix and pricing to offset $165 million in additional feed costs for the quarter. Our Beef segment suffered margin compression as consumers opted for the relative value of chicken. Our Pork segment faced periods of supply and demand imbalance after the loss of some export markets, while soft demand in food service impacted our Prepared Foods segment," Smith noted.
Operating margin for the quarter slumped 160 basis points to 2.1 percent, as gross margin contracted 170 basis points to 4.8 percent from last year.
Net interest expense for the quarter declined 28 percent to $34 million from last year.
Looking ahead to fiscal 2013, Tyson Foods trimmed its sales guidance to about $34.5 billion from the prior forecast of about $35 billion, citing price increases related to expected decreases in domestic availability of certain protein and increased raw material costs. Street is currently looking for full-year 2013 revenues of $34.49 billion.
"Our EPS for the quarter wasn't at the level we'd like, but on an adjusted basis, we're about where we were at this point last year. I'm still confident our results for 2013 will be better than 2012 Smith added.
TSN closed Friday's regular trading session at $24.93, up $0.13 on a volume of 2.99 million shares. In the past 52-week period, the stock has been trading in a range of $14.07 to $25.12.
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