Tyson revises earnings forecast
Tyson Foods Inc. — the Springdale-based company that is the largest employer in Carroll County — said Monday that it expects its adjusted earnings for fiscal year 2018 to be lower than previously anticipated, in part because of tariffs and a volatile global market.
In a statement released Monday, Tyson said it expects adjusted earnings for fiscal 2018 to be approximately $5.70 to $6 per share, a drop of more than 10 percent from its previous estimates of earnings ranging $6.55 to $6.70 per share.
“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,” Tyson Foods president and chief executive officer Tom Hayes said in a news release. “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.”
Tyson’s statement listed the primary factors in its lowered earnings expectations as:
• Uncertainty in trade policies and increased tariffs negatively impacting domestic and export prices, primarily for chicken and pork;
• Increased volatility in the commodity markets resulting in a glut in the domestic supply of proteins and lower sales prices;
• Sluggish domestic chicken demand due to the lower prices for other meats;
• Compression in pork margins driven by an imbalance in supply and demand;
• A smaller-than-expected benefit from changes to the federal tax code — 77 cents per share vs. a previous projection of 85 cents per share.
“The fundamentals of our business are solid, and global demand for protein in all forms remains strong,” Hayes said. “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 company is expected to announce results for the third quarter of its 2018 fiscal year in a conference call Monday, Aug. 6.