Tyson Q3 income drops on soft protein demand
Tyson reported third quarter and nine months fiscal 2012 results. Net income in the third quarter dropped to $73 million from $188 million in 2011, though operating income rose from $8.247 billion in 2011 to $8.308 billion this year.
“We produced solid results in our fiscal third quarter despite softer than expected domestic demand for protein,” said Donnie Smith, president and CEO of Tyson Foods. “I am especially pleased with the performance of our Chicken and Prepared Foods segments. Our Beef and Pork segments have been operating in very difficult market conditions that will result in our earnings for fiscal 2012 coming in lower than we previously projected.
“Grain costs have been increasing significantly and rapidly, largely as a result of the on-going U.S. drought. While we ultimately expect to pass along rising input costs, these costs, coupled with continued soft demand, are likely to pressure earnings in 2013. However, we still anticipate solid earnings for the year, and we are performing well during challenging circumstances. With our strong balance sheet, customer relationships, new product development capabilities, and efficient operations, we believe Tyson Foods is in the best position in our industry to succeed now and in the future,” he added.
“We're often faced with challenges in our business, but our strategy will allow us to manage through trying times for continued success,” Smith continued. “We are focused on growing our prepared foods, international poultry and value-added poultry businesses. We can't make it rain, but we can execute against our strategy by producing high quality foods using innovative and cost effective processes. It's tough right now, but I'm confident we will come out of this in even better shape than we are in today.”
The decrease in sales volumes in the third quarter and nine months of fiscal 2012, the company stated, was primarily attributable to a decrease in domestic production pounds as a result of balancing its supply with forecasted customer demand, partially offset by increases in international sales volumes and open-market meat purchases.
Tyson announced it expects fiscal 2012 sales to approximate $33 billion, down $1 billion from its previous estimate due to weak domestic protein demand.
Source: Tyson Foods Inc.