Second Quarter Was Better for Tyson

US - Tyson Foods has reported its second quarter (Q2) and six-month results. Operating margins for its Pork, Beef and Prepared Foods businesses were positive, and there was an improvement in the performance of its Chicken activities compared to the previous quarter.

5 May 2009

3 minute read

North America

Tyson Foods has reported its Q2 and six-month results. Q2 2009 earnings per share was $(0.28) as compared to $(0.02) last year. Income tax expense includes $62 million, or $(0.17) per diluted share, from changing the method of recognizing interim income taxes.

Chicken operating loss was $46 million, an improvement of $240 million versus first quarter 2009. Pork operating margin was $29 million, or 3.4 per cent, while Beef operating margin was $28 million, or 1.2 per cent. Prepared Foods operating margin was $19 million, or 2.8 per cent; excluding the impact of plant closing charges of $15 million, operating margin was $34 million, or 5.0 per cent. The company ended the quarter with over $1.1 billion of cash at the end of the quarter, including restricted cash.

"Our loss of $0.24 per share from continuing operations in the second quarter includes $0.17 from a change in the method we used to recognize interim income taxes and $0.02 from a one-time charge for a prepared foods plant closure," said Leland Tollett, interim president and CEO of Tyson Foods.

"Our Chicken segment has been profitable since the end of February, and I am pleased with the consistent progress we are making. We have improved our operational efficiencies, our product mix, and we are benefiting from lower grain costs and more favorable chicken prices. Our Beef, Pork and Prepared Foods segments generated financial returns at or near normalized ranges in the second quarter, excluding one-time charges in Prepared Foods. Our tax rate for the remainder of the fiscal year should be closer to normal, and we believe the operational recovery we are experiencing will be reflected in our results for the third and fourth quarters.

Beef sector

The Beef business accounted for 38.4 per cent of Net Sales in Q2 2009, and 39.6 per cent of Net Sales in the first six months of 2009.

Beef segment sales were $2.4 billion and $5.1 billion, respectively, in the second quarter and six months of fiscal 2009. Operating income was $28 million in both the second quarter and six months of fiscal 2009.

Operating results as compared to the same periods in 2008 were impacted positively by lower average live prices, offset by lower average sales prices and decreased sales volume. Operating results were impacted in the second quarter and six months of fiscal 2009 by a decline of $6 million and an improvement of $35 million, respectively, from our commodity risk management activities related to forward futures contracts for live cattle as compared to the same periods of fiscal 2008. These amounts exclude the impact from related physical sale and purchase transactions, which impact current and future period operating results.

Operating results for the second quarter and six months of fiscal 2008 included charges of $25 million related to restructuring operations at the Emporia, Kansas, plant and an impairment of packaging equipment.