In the third quarter, the Springdale, Ark.-based company reported a 4 percent increase in sales to .1 billion.
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Tyson’s shares dropped by 9.6% in Monday trading before the bell after the company reported quarterly profit that was lower than had been expected due to its beef business recording an operating loss. Sales volume was down 4 percent and what Smith described as “export market disruptions” cost the company about $84 million. Because we run for margin and not for market share, we’re not willing to overpay for cattle, and we’ve had to cut back on our hours at our plants, resulting in inefficiencies and added costs.
“The fundamentals in this segment remain strong and we continue to focus on a long-term growth and brand building”, he said.
Additionally, analysts at Goldman Sachs recommend buying Tyson Foods on the weakness following its third quarter results, theflyonthewall.com reports.
Tyson Foods also revealed that strong chicken sales and prepared foods drove record adjusted operating income up 40% to $568m.
The results missed Wall Street expectations.
“We’ve positioned ourselves well for fiscal 2016 and we’re confident in our ability to achieve at least 10% annual earnings per share growth over time”, Smith also told the site. “I can just tell you how it impacted our business”.
The company sold beef at low prices to clear supply and backlog from the port disruption on the West Coast, said on JPMorgan analyst. Tyson sold $2.75 billion in its chicken segment for the third quarter of 2015, compared to $2.82 billion a year ago.
Tyson expects overall domestic protein production (chicken, beef, pork and turkey) to increase roughly 3% year over year in fiscal 2016.
Tyson forecast its beef division margins in the group’s 2016 fiscal year improving somewhat from the “breakeven” performance expected for 2015. “The majority of the synergies, $79 million for the quarter, fell within the Prepared Foods segment where we continue to re-rate the cost structure of the business”.
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Cost-cutting associated with the Hillshire merger will save the company about $300 million this year, Smith said. The company has a 52-week high of $45.1. Investors looking further ahead, will note that the Price to next year’s EPS is 10.763.
