You are here

UPDATE 2-Tyson Foods earnings miss forecasts as slaughterhouse fire hurts beef sales

(Adds details on slaughterhouse fire, operating margins)

CHICAGO, Nov 12 (Reuters) - Tyson Foods Inc fell short of Wall Street estimates for quarterly revenue and profit on Tuesday after a fire at a Kansas slaughterhouse hurt sales volumes in its beef business, the company's biggest segment.

Shares of the maker of Ball Park hotdogs and Jimmy Dean sausages fell about 4% before the opening bell. They have gained nearly 55% this year.

Tyson grappled with the fire as the global meat industry focused on increasing sales China, where an outbreak of a fatal pig disease has slashed pork production.

U.S. producers have been hampered due to tariffs imposed by Beijing as part of the countries' trade war.

The fire at the Holcomb, Kansas, slaughterhouse in August left restaurants, food service companies and grocery chains scrambling to buy beef from other facilities.

As a result, volumes in Tyson's business fell 4.2% in the fourth quarter to Sept. 28, with sales down 1.3%. The fire also resulted in $31 million of net incremental costs, the company said.

Still, profit margins for U.S. beef processors set record highs after the fire as beef prices climbed.

At the same time, cattle prices tanked because the fire temporarily eliminated a key buyer of livestock, prompting a U.S. government investigation into the market.

Tyson's operating margins for beef were 9.7%, up from 8.9% a year earlier. Margins declined in its pork, chicken and prepared foods units.

Excluding items, the company earned $1.21 per share, compared with the average analyst estimate of $1.29, according to IBES data from Refinitiv.

Total sales rose nearly 9% to $10.88 billion on strength in its pork and chicken segments, but missed the average estimate of $11 billion.

Net income attributable to Tyson fell to $369 million, or $1.01 per share, in the fourth quarter to Sept. 28, from $537 million, or $1.47 per share, a year earlier. (Reporting by Nivedita Balu in Bengaluru and Tom Polansek in Chicago; Editing by Sriraj Kalluvila and Jan Harvey)

© Copyright Thomson Reuters 2019. Click For Restrictions - http://about.reuters.com/fulllegal.asp

Read more about

Tip of the Day

Agronomy Tip: Add Sulfur to Your Fertility Program

A corn field in the middle of summer. Add sulfur to your fertility program through a dry application or by sidedressing with liquid.

Talk in Marketing

Most Recent Poll

What was the moisture content of corn you harvested?