LITTLE ROCK — Tyson Foods Inc. on Monday said its struggling beef division broke even during the January through March period. The Springdale business said the performance of the segment - one of four - had been hurt by a national debate surrounding an additive in ground beef.
“Demand temporarily decreased” for most beef products, Jim Lochner, Tyson’s chief operating officer, told analysts in a conference call Monday. As a result, the company reduced slaughter, and continues doing that, he said.
The company reported fiscal second-quarter profit of $166 million, or 44 cents per share, for the period ending March 31, a 4 percent increase compared with net income of $159 million, or 42 cents a share, for the year-ago period.
Tyson’s earnings beat the average estimate of 39 cents per share from 15 analysts surveyed by Thomson Reuters.
Revenue increased 3 percent, $8.27 billion, compared with $8 billion a year earlier.
Television and social media sites helped create a groundswell of public opinion against so-called lean beef trimmings used in ground beef.
Ground beef sales in March slipped to 37.7 million pounds, the smallest amount in a decade and an 11 percent slide from the previous month, according to data from the U.S. Department of Agriculture, the Los Angeles Times reported.
Meat packers such as Tyson Foods supply the trimmings to other food businesses for further processing, the Times reported.
Tyson said in Monday’s filing with the U.S. Securities and Exchange Commission that difficulties in the beef division will continue into the early part of the fiscal third quarter,
Tyson, however, expects the segment to recover in the second half of the year.
During the second quarter, the company repurchased $70 million in company stock, or about 3.6 million shares. And directors approved an additional 35 million shares for repurchase, which when added to the remainder of a previously announced repurchase program will total 42.4 million of outstanding shares eligible for removal from the market.
Tim Ramey, an equity analyst with D.A. Davidson & Co. of Lake Oswego, Ore., said other uses of Tyson cash include the continued investing in domestic and international operations. The company recently announced multimillion-dollar projects at a poultry plant in Sedalia, Mo., and at a beef processing plant in Dakota City, Neb.
But with an overall second quarter operating margin of 3.7 percent, Ramey said, Tyson is “still not in a great operating environment.”
“It’s improved,” he said, “but it’s not great.”
Poultry, pork and prepared food segments performed above so-called normal operating ranges, a news release from Tyson said.
In the same conference call Monday, Donnie Smith, president and chief executive officer of Tyson Foods, said, “I think we’ve positioned ourselves very well for the summer.”
With regard to recent changes in the price of gasoline at the pump, “we’re cautiously optimistic that the worst is over for the food-service industry,” Smith said.
Business, Pages 21 on 05/08/2012