Tyson Foods Inc. has revised fiscal year 2018 guidance. Although unable to reconcile revised 2018 adjusted earnings per share guidance to GAAP, the company now expects adjusted earnings for fiscal year 2018 to approximate $5.70-6.00 per share. Previously, the company had expected adjusted earnings per share of $6.55-6.70.
The primary drivers for this fiscal 2018 guidance update are:
- Uncertainty in trade policies and increased tariffs negatively impacting domestic and export prices - primarily chicken and pork
- Increased volatility in the commodity markets resulting in a greater than expected increase in the domestic supply of proteins and lower sales prices
- Sluggish domestic chicken demand due to such pricing of competing proteins
- Pork margin compression driven by an imbalance in supply and demand
- A benefit from tax reform of about $0.77 per share vs. a previous projection of $0.85 cents per share.
“The fundamentals of our business are solid, and global demand for protein in all forms remains strong,” said Tom Hayes, Tyson Foods president and chief executive officer. “Our beef and prepared foods businesses are performing very well, and I believe the diversity of our portfolio of proteins and brands has given us some level of insulation from challenging market conditions. Our forecasted earnings range reflects the current market volatility in meat prices.
“The combination of changing global trade policies here and abroad, and the uncertainty of any resolution, have created a challenging market environment of increased volatility, lower prices and oversupply of protein. We will continue to watch these conditions carefully.
“Through pricing and aggressive cost management, we’re working to stabilize the impact of freight and feed ingredient costs; however, we still face pressure on chicken sales volume and pricing due to the abundance of relatively low-priced beef and pork on the market. We are working to mitigate these pressures, but our fourth quarter is off to a slower than expected start driven primarily by market related factors. We expect the supply-demand imbalance to equilibrate, and we remain confident in our ability to grow our company and create long-term shareholder value. Our management team has a strong grasp of both the short and long term challenges and is actively driving the business to overcome them.”
Source: Tyson Foods