Tyson Foods (TSN 57.54, -4.07, -6.61%) showed a pre-market
loss of 3.8% after reporting better than expected earnings, which were
overshadowed by below-consensus revenue and cautious guidance for fiscal 2019.
The pre-market decline puts the stock just above its October low (58.54) with
the July low (56.79) looming not far below.
The food company, which owns brands like Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp, and State Fair, reported above-consensus fourth quarter earnings of $1.58 per share on a 1.4% yr/yr decline in revenue to $10.00 bln, which was shy of expectations.
Going forward, Tyson expects that earnings for fiscal 2019 will be between $5.75 per share and $6.10 per share while revenue is expected to hit $41.00 bln. The midpoint of the company's earnings guidance is below market expectations, as is Tyson's revenue guidance. Overall, the company's guidance represents expectations for a fiscal year that will be largely consistent with fiscal 2018.
Tyson's revenue decline in the fourth quarter was driven by a 4.1% drop in average price, while volume grew 2.7%, but not enough to entirely offset the decline in prices. Tyson's total operating margin improved to 8.3% from 6.7% one year ago thanks to a big jump in Prepared Foods operating income, which surged to $241 mln from $11 mln one year ago.
Looking at the segment breakdown, Beef sales volume grew 3.4% while average prices declined 0.6%. Segment revenue grew 2.8% to $3.91 bln while operating income increased 13.8% to $347 mln. Operating margin improved to 8.9% from 8.0%. The decline in prices resulted from higher supply of live cattle and lower livestock costs.
Pork sales volume declined 2.7% while average prices fell 14.5%. Segment revenue fell 16.7% to $1.13 bln while operating income declined 37.2% to $76 mln. Operating margin weakened to 6.7% from 8.9%. Lower livestock costs and excess supply contributed to the decline in prices.
Chicken sales volume grew 10.4% while average prices declined 7.0%. Segment revenue grew 2.6% to $3.12 bln while operating income decreased 33.8% to $174 mln. Operating margin weakened to 5.6% from 8.7%. Incremental volume from acquisitions fueled the growth in sales volume while prices were pressured by the sales mix. Higher labor, freight, and growout expenses pressured operating income.
Prepared Food sales volume fell 7.9% while average prices increased 0.6%. Segment revenue declined 7.3% to $2.10 bln while operating income spiked to $241 mln from $11 mln one year ago. Operating margin improved to 11.5% from 0.5%. Sales volume was reduced by business divestitures. Average sales price grew due to product mix.
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