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Tyson's Fiscal Second-Quarter Earnings, Sales Rise But Increasing Costs Spur Margin Concerns

05/10/2021 07:17

11:06 AM EDT, 05/10/2021 (MT Newswires) -- Tyson Foods (TSN) reported higher fiscal second-quarter earnings on Monday that beat Wall Street estimates and raised its 2021 outlook, but warned that higher costs could impact margins in the latter part of the year.

The Springdale, Arkansas-based food producer posted adjusted profit of $1.34 a share in the three months through April 3, compared with $0.80 a share for the same period in 2020. Analysts polled by Capital IQ estimated Tyson would report an adjusted profit of $1.16 a share. Sales rose to $11.3 billion from $10.89 billion a year ago and were just ahead of the Street's view for $11.19 billion.

"We delivered a very strong performance in a complex operating environment with continued success in retail and improvements in foodservice as the industry is recovering," Chief Executive Dean Banks said in a statement.

Tyson saw sales of beef climbed to $4.05 billion from $3.98 billion, while chicken rose to $3.55 billion from $3.4 billion and pork increased to $1.48 billion from $1.27 billion. Prepared foods sales rose to $2.16 billion from $2.08 billion.

Still, Tyson said increasing costs were pressuring margins, such as the rising price of chicken feed and raw materials for its packaged foods. It expects to incur expenses of around $365 million in fiscal 2021 related to the COVID-19 pandemic, and some of those costs may become permanent.

"We're seeing substantial inflation across our supply chain, which will likely create margin pressure during the back half of the year," said Banks. "We will remain focused on the factors we can control and will continue to work diligently for a full recovery of our chicken business, while delivering strong results in other areas of our company."

Tyson said it now sees reporting fiscal 2021 revenue of $44 billion to $46 billion, due largely to improvement in the beef market and the pass-through of rising costs, up from its prior guidance of $42 billion to $44 billion. Analysts were expecting $44.6 billion.

"Our long-term outlook is bright as global protein consumption continues to grow, and we expect our investments in capacity expansion, product innovation and technology to create sustainable shareholder value," Banks said.

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