LITTLE ROCK — Tyson Foods Inc. of Springdale saw its first-quarter profit fall, saying a “rough patch” in the beef sector contributed to the weakness in the October-through-December period.
Tyson reported a 48 percent decline in net income at $156 million, or 42 cents per share, for the quarter that ended Dec. 31, compared with $298 million, or 78 cents per share, for the first quarter of 2011.
It beat the average earnings estimate of 33 cents per share from 16 analyst surveyed by Thomson Reuters.
It reported $8.33 billion in revenue for the first quarter, a 9 percent boost compared with revenue of $7.62 billion in the same year-ago period.
Shares of Tyson Foods Inc. rose 76 cents, or 4.08 percent, to $19.38 per share on the New York Stock Exchange. Its shares have traded as high as $21.06 and as low as $15.60 over the past year.
Tyson has four operating segments: beef, pork, chicken and prepared foods.
Timothy Ramey, an analyst with D.A. Davidson & Co. of Montana, said Friday that the company’s overall operating margin of 3.3 percent was seen as low by the investment community.
Tyson is “not going to take a victory lap after putting this number out today,” Ramey said the company’s earnings included some positive news such as a chicken segment that returned to profitability and pork and prepared-foods segments that had performed better than expected.
“Overall the first quarter beat analysts’ expectations,” he said, “but expectations were low.”
In helping explain the results from Tyson’s beef segment, Jim Lochner, chief operating officer, in a conference call with analysts Friday morning said the meatpacking industry bought overpriced cattle during the quarter and revenue was not enough to recapture the expense.
Quarterly beef sales fell off by 8.5 percent in part because of fewer processed cattle, and the segment’s operating income dropped along with sales.
The segment reported $31 million in operating income in the fourth quarter for a 0.9 percent operating margin.
John Navilka, a consultant with Sterling Marketing in Vale, Ore., estimated packers lost $52 per head.
Wholesale prices released by the U.S. Department of Agriculture for the industry during the October-through-December period confirmed the upward trend in choice and feeder steer prices. The USDA pricing data also showed pork prices tumbled during Tyson’s first quarter, allowing the company to recoup lost profit from other segments.
“The pork complex is in a good balance with domestic exports and supplies,” Tyson’s Lochner said during the morning analyst call.
Pork sales increased 2.6 percent, and Tyson attributed the segment’s gain to export sales, which help push up domestic prices. The segment’s operating margin was reported at 11.2 percent.
Export sales represent higher prices for the pork industry, said Navilka, who estimated a profit of $10 per animal in the Octoberthrough-December quarter.
Chicken and preparedfood segments posted positive margins at 1.2 percent and 5.9 percent, respectively.
“The beauty of our model is that not every segment has be operating just perfectly all the time to deliver value for customers and shareholders,” President and Chief Executive Officer Donnie Smith said Friday during the same conference call. “We’re off to a good start.”
Business, Pages 29 on 02/04/2012