Tyson Foods has seen half-year profits slashed after a second quarter hit by soaring feed costs and charges for plant closures.
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The US meat giant booked operating income of US$128m for the six months to 29 March, down from $303m a year earlier.
During its second quarter, Tyson incurred costs of $30m due to its decision to revamp a beef slaughtering facility in Kansas and to close a production site in North Carolina.
Continuing pressure from higher feed costs also weighed on Tyson, which posted a second-quarter operating income of $44m, compared to $158m a year ago.
However, rising sales cheered president and CEO Richard Bond. Half-year revenue rose 2.4% to $13.4bn after second-quarter sales inched up 1.7%.
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By GlobalData“Our second quarter results show the strength of a diversified protein business model,” Bond said.
Bond said Tyson’s pork business had its “best-ever” January-to-March quarter, while the company’s beef operations saw an improvement from the company’s first quarter.
However, he said that “significantly higher and volatile input costs” had led to losses from Tyson’s chicken operations.
“Looking forward to the third quarter, in the chicken segment, we anticipate an additional $100m of increased grain costs over the second quarter, offset in part by operational improvements, pricing and risk management activities,” Bond said.
Grain costs have hit the US livestock industry with the rise in biofuel production blamed for pushing up commodity prices.
Over the weekend, Bond praised Texas state governor Rick Perry for asking Washington to ease its regulations on diverting corn to biofuels.
“Something has to be done to address corn-based ethanol’s detrimental impact on food prices and this is a good first step,” Bond said.
