US meat giant Tyson Foods has reported a slump in quarterly profits after feed costs hit profits from its poultry operations.
The company today (8 August) posted a 21% fall in net income to US$196m in its third quarter, which ended on 2 July. Tyson’s operating income tumbled 38.5% to $312m.
The processor’s third-quarter sales were a “record” $8.2bn, which was up 10.9% on the year, but higher grain and feed costs hit the company’s poultry profits.
Operating income from Tyson’s chicken division stood at $28m. In last year’s third quarter, profits from the unit were $186m. Tyson said its poultry business was dealing with “extremely volatile” input costs and over-supply in the industry, which had pushed prices to “at or near historical lows”.
Tyson also saw operating income from its beef and pork divisions fall but the drop was not as steep as the company saw from chicken.
President and CEO Donnie Smith said Tyson’s “overall performance” was “about what we expected it to be” and was sanguine about the results from the company’s chicken division.
“We feel good about our performance in the chicken segment while experiencing extremely volatile input costs and market prices at or near historical lows. The fact that we remained profitable in such a difficult environment demonstrates how much our chicken business has improved in the past three years.”
However, Smith revealed that the poultry division would be unlikely to make a profit in the fourth quarter of Tyson’s financial year.
“There appears to be improvement in market fundamentals on the horizon, but the next few months will be very challenging and it is likely our chicken segment will experience a loss in the fiscal fourth quarter,” Smith said.
Shares in Tyson were up 0.43% at US$16.38 at 10:45 ET.
Click here for the full statement from Tyson.