Tyson’s net income doubles in quarter, revenue rises 7.74%

SPRINGDALE - Tyson Foods Inc. more than doubled its net income for the second quarter of fiscal 2014 despite hurdles in pork, beef and international segments.

On Monday, Tyson reported $9 billion in revenue in the second quarter, up 7.74 percent compared with a year ago. Tyson exceeded revenue estimates by $16 million, according to eight analysts with Yahoo Finance.

The company reported net income of $213 million, or 60 cents a share, up from $95 million, or 43 cents a share, for the same quarter a year ago. Although the company exceeded analyst revenue estimates, it missed by 3 cents the earnings predicted by 10 analysts with Yahoo Finance.

International business was down for the second consecutive quarter, and Tyson lost $30 million, down 9.1 percent. Despite the negative return, production increased by 13.8percent.

“China is still the biggest portion of the loss due to the demand destruction,” said Donnie Smith, president and chief executive officer. “Our operations in Brazil also struggled in quarter two, but we’ve restructured our team to improve operational focus.”

Winter weather had a significant effect on Tyson’s second quarter, Smith said. “Although we saw a dip in our sales to school cafeterias from weather-related closings, we saw an increase in our retail sales,” he said.

By sector, Tyson’s chicken segment generated $234 million in operating income, up 8.2 percent. Production increased by 4.3 percent. Although volume was up, Smith said he only expects a 2 percent to 3 percent increase in chicken production for the remainder of the fiscal year.

The beef segment generated $35 million in operating income, up 0.9 percent. Production decreased by 1.8percent, which is attributed to lower cattle numbers and higher cattle prices.

The pork segment generated $107 million in operating income, up 7.2 percent. Although production increased by 0.7 percent, the effects of porcine epidemic diarrhea virus, which is lethal to piglets, are expected to affect later quarters, Smith said.

“Hog weights are expected to be higher and offset some of the head reductions,” Smith said. “So we anticipate industry pork production to be down as much as 4 percent for the year.”

The prepared foods segment generated $21 million in operating income. Volume rose by 8.1 percent.

Tyson repurchased more than 2.5 million shares for $100 million under the share repurchase program during the second quarter, Chief Financial Officer Dennis Leatherby said.

During trading Monday, Tyson’s stock closed at $38.44, down $4.21, or 9.8 percent, on the New York Stock Exchange. The stock has traded between $23.39 and $40.69 in the past year.

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Tyson EARN

Business, Pages 23 on 05/06/2014

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