•  Net income up 58% to US$210
  •  Operating earnings up 53%
  •  Sales gain 7.8%
Tyson shares plunge

Tyson shares plunge

Shares in Tyson Foods fell by almost 10% yesterday (5 May) after a surge in earnings failed to meet analyst expectations.

Sales in the period rose to US$9.03bn, up from $8.38bn last year and operating income increased to $361m, compared to $236m in the year-ago period. The meat giant said that net earnings in the three months more than doubled to $210m, up from $106m last year.

However, the market was disappointed with Tyson's bottom line. EPS totalled $0.60 compared to consensus expectations of $0.62 and shares closed down 9.87% in New York yesterday.

Prior to yesterday's drop, Tyson's year-to-date market capitalisation had increased by around one-quarter.

Click here for our On the money analysis of Tyson's results and potential M&A ambitions.

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(in millions, except per share data) Second Quarter Six Months
  2014 2013 2014 2013
Sales  $ 9,032  $ 8,383  $ 17,793  $ 16,749
Operating Income 361 236 773 540
Income from Continuing Operations 210 168 462 340
Loss from Discontinued Operation, Net of Tax (62) (66)
Net Income 210 106 462 274
Less: Net Income (Loss) Attributable to Noncontrolling Interests (3) 11 (5) 6
Net Income Attributable to Tyson  $ 213  $ 95  $ 467  $ 268
Net Income Per Share from Continuing Operations Attributable to Tyson  $ 0.60  $ 0.43  $ 1.32  $ 0.92
AdjustedNet Income Per Share from Continuing Operations Attributable to Tyson  $ 0.60  $ 0.38  $ 1.32  $ 0.87
Net Income Per Share Attributable to Tyson  $ 0.60  $ 0.26  $ 1.32  $ 0.74
Adjusted1 Net Income Per Share Attributable to Tyson  $ 0.60  $ 0.36  $ 1.32  $ 0.84
Adjusted EPS is explained and reconciled to comparable GAAP measure at the end of this release.

Second Quarter Highlights

  • EPS up 58% to $0.60 compared to adjusted EPS from continuing operations of$0.38 in second quarter of prior year
  • Quarterly sales surpass the $9.0 billion mark for the first time; increase of 7.7% over second quarter of prior year
  • Operating income increased 53% to $361 million
  • Overall operating margin was 4.0%
    • Chicken segment operating income of $234 million
      • 8.2% operating margin
    • Pork segment operating income of $107 million
      • 7.2% operating margin
  • Repurchased 2.5 million shares for $100 million

"We had a record second quarter, which is a testament to our great team and our balanced multi-protein, multi-channel, multi-national business model," said Donnie Smith , Tyson Foods'president and chief executive officer. "Our second quarter is usually our most challenging. We had a lot to overcome, including a harsher than normal winter, but I'm satisfied with the results. I'm still confident in my expectations for the year that we will achieve our goal of 6-8% sales growth in value-added products while generating at least $2.78 earnings per share.

"We're pleased with the performance of our Chicken segment as sales volume grew on strong demand. Our Beef and Pork segments did a great job of managing tight supplies and maintaining margins through record high input costs. In our Prepared Foods segment in the second quarter, we integrated recent acquisitions, invested in marketing and advertising and had several new successful product launches. While these efforts take time to bear fruit, we believe Prepared Foods presents one of the best opportunities for earnings growth in the future.

"The International segment is another area where we think some short-term sacrifices are worth the long-term earnings potential. We've chosen to slow down our growth this year, primarily due to weak demand in China. We are committed to our China operations, and we believe we now have the right pace for developing that business as we wait for demand to return. We think it will get sequentially better from here, and we like the long-term opportunity."

Original source: Tyson Foods