Tyson hit hard by rising beef costs and export issues

SHARE Tyson hit hard by rising beef costs and export issues
SHARE Tyson hit hard by rising beef costs and export issues

Tyson Foods’ third-quarter profit leapt 32 percent, but that was still short of expectations and the company cut its outlook with high cattle costs expected to continue to weigh on revenue growth.

“Unless beef market conditions improve rapidly, we will not achieve our previous guidance,” CEO Donnie Smith said Monday.

Tyson is also being hammered on exports with bans in some countries following a U.S. outbreak avian influenza, as well as a strong dollar.

Net income for the quarter reached $343 million, or 83 cents per share. Earnings, adjusted for non-recurring gains, came to 80 cents per share.

That was 15 cents shy of what industry analysts had expected, according to a poll by Zacks Investment Research.

Revenue rose 4 percent to $10.07 billion and sales volume for the prepared foods unit climbed, thanks in part to the acquisition of Chicago-based Hillshire Brands last August.

But the beef business overshadowed those numbers.

Smith said beef “under-delivered our expectations by $84 million,” in a conference call Monday. There was also an excess of beef on the market, forcing sales at lower prices, and a labor dispute at West Coast ports also disrupted business, Smith said.

The Springdale, Arizona, company warned that the conditions would make it difficult to meet prior full-year guidance of $3.30 to $3.40 per share. The company cut its outlook to between $3.10 and $3.20 per share.

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