Wednesday, February 2, 2011

Tyson Foods Inc. (NYSE: TSN): Q1 Earnings Preview 2011

Tyson Foods Inc. (NYSE: TSN) is scheduled to report fiscal first-quarter earnings before the opening bell on Friday, February 4, 2010. Analysts on average expect the company to report earnings of 62 cents per share on revenue of $7.18 billion. In the year ago period, the company reported earnings of 42 cents per share on revenue of $6.64 billion. 

Tyson Foods, Inc. and its subsidiaries engage in the production, distribution, and marketing of chicken, beef, pork, prepared foods, and related allied products worldwide. It operates in four segments: Chicken, Beef, Pork and Prepared Foods.

In the preceding fourth quarter, the Springdale, Arkansas based company's net income was $208 million, or 57 cents a share, compared to a loss of $457 million, or $1.23 a share, in the year-ago quarter. On an adjusted basis, the company earned 64 cents per share in the latest quarter. Revenue rose slightly to $7.44 billion from $7.24 billion in the same quarter last year. 

For 2011, the company said overall protein (chicken, beef, pork and turkey) production is expected to increase as exports are likely to grow as well. However, the company sees total domestic availability of protein should be relatively flat compared to 2010. Tyson forecasts chicken production to increase, while domestic availability will depend on export volumes. Because of the less than expected yields in global feed grain crop production, current futures prices indicate higher grain costs in fiscal 2011 compared to fiscal 2010. The company expects to offset the impact of increased grain costs with operational and pricing improvements. For its Beef operations, Tyson projects a gradual reduction in cattle supplies of 1-2 percent in fiscal 2011 and expects beef exports to remain strong in fiscal 2011. In addition, Tyson anticipates hog supplies in fiscal 2011 will be comparable to fiscal 2010 and believes it will have adequate supplies in its operating regions.

The company has benefited from higher meat prices, operational improvement and top line sales growth. In addition to improved operational performance, Tyson has reduced its debt load significantly. 

Meat producers such as Tyson Foods Inc. and Smithfield Foods Inc. are continuing to rebound from their low recession levels, as demand remains high and the measures they took to increase efficiency during the recession continue to take effect. The growing wealth in Asia has been a boon to the pork industry, as the meat is popular in this part of the world so demand has been strong.

Full Disclosure: None.

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