US meat giant Tyson Foods has booked a drop in first-half profits, hurt by volatile market conditions and reduced demand for beef products.
In the six months to the end of March, net profits slumped 28.4% to US$322m, the company reported yesterday (7 May).
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Tyson said it experienced a decrease in fed cattle supplies of around 5% in the period. It added that, while the company’s beef segment remained profitable, it was challenged by volatile market conditions and reduced demand for beef products, which made it difficult to pass along increased input costs.
Operating profits in the period slid 27.6% to $580m, while sales climbed 6.3% to $16.6bn.
“Our multi-protein business again proved advantageous, producing solid earnings for the fiscal second quarter,” said Tyson president and CEO Donnie Smith. “The chicken, pork and prepared foods segments all were in or above their normalised operating margin ranges, while beef essentially broke even despite extremely challenging market conditions.”
In the second quarter, net profits grew 6.4% to $166m, while operating profits edged up 0.3% to $302m. Sales in the period amounted to $8.27bn, a 3.4% increase on the prior-year period.
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By GlobalDataSmith said he expects the company to “gain momentum” in the coming months and that Tyson still has the potential to earn $2 per share for the year, as it previously forecast.
Click here to view the full earnings release.
