EmailTyson Foods (TSN $15.10 -0.30) reported third quarter earnings of $0.50 per share, ex items, $0.05 worse than the Capital IQ Consensus of $0.55, while revenues rose 0.7% year/year to $8.31 billion versus the $8.73 billion consensus. The company lowered revenue guidance for fiscal year 2012 with FY12 revenues of approximately $33 billion from prior guidance of approximately $34 bln versus the $34.04 billion consensus. The company also issued in-line guidance for fiscal year 2013 with revenues of approximately $35 billion versus the $35.43 billion consensus.
"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....Current USDA data shows U.S. chicken production to be relatively flat in fiscal 2013 compared to fiscal 2012. However, changing crop conditions and pricing could change this estimate. The capital investment and significant operational improvements we have made in our Chicken segment have better positioned us to adjust to rising grain prices and remain profitable. Due to the current run up in grain prices, we will be challenged in fiscal 2013, but anticipate our Chicken segment will remain profitable." In fiscal 2013, we expect overall domestic protein production (chicken, beef, pork and turkey) to decrease slightly from fiscal 2012 levels. The recent drought conditions have reduced expected grain supplies, which will result in higher input costs as well as increased costs for cattle and hog producers.
