Tyson Foods Earnings Miss Forecasts As Slaughterhouse Fire Hurts Beef Sales
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.
Demand In China
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.
US 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 28 September, with sales down 1.3%. The fire also resulted in $31 million (€28.13 million) of net incremental costs, the company said.
Still, profit margins for US 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 US 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 (€9.87 billion) on strength in its pork and chicken segments, but missed the average estimate of $11 billion (€9.98 billion).
Net income attributable to Tyson fell to $369 million (€334.79 million), or $1.01 per share, in the fourth quarter to 28 September, from $537 million (€487.22 million), or $1.47 per share, a year earlier.