LITTLE ROCK — Tyson Foods Inc. trimmed its sales and profit forecasts for fiscal 2012 on Monday, citing higher feed costs resulting from the ongoing drought and a one-time charge to pay off debt.
The Springdale-based meat processor reported third-quarter net income of $76 million, or 21 cents a share, for the period ending June 30, down from $196 million, or 51 cents a share a year ago. The results included a pretax charge of $167 million, or 29 cents a share, for early repayment of debt.
Excluding that charge, Tyson’s earnings were 50 cents a share, down just a penny from a year ago. The average forecast by 13 analysts was 54 cents.
Revenue for the quarter totaled $8.3 billion, up from$8.2 billion.
Tyson’s stock hit a 52-week low Monday, closing at $14.17 a share, down $1.23 or 8 percent from Friday. Before Monday, the stock had traded between $14.62 and $21.06 over the past year.
Donnie Smith, the company’s president and chief executive officer, said in a conference call with reporters that, “I think we’re pulling all the levers to keep ourselves well positioned.”
He cautioned, however, that consumers will face higher prices as feeding costs rise because of the drought. Cattle, hog and chicken producers and processors are all squeezed by shorter supplies of feed stocks, he said.
“We all feel this together,” Smith said. One side effect of the drought, he said, is that cattle are being pushed farther north where growing conditions are not as severe.
Tim Ramey, analyst with D.A. Davidson & Co. of Lake Oswego, Ore., said in a research report to investors that he had lowered Tyson’s target stock price to $15 from $24 and trimmed his fiscal year earnings-per-share forecast to $1.55 from $2.55. Without production cuts, he said, chicken margins are likely to turn negative in the next fiscal year.
“While Tyson is a better company than it was three years ago, it may be tested meaningfully in [fiscal year] ’13,” Ramey said. “This is a good test of CEO Donnie Smith. He has been very effective at restoring Tyson’s earnings power and bringing it back from the brink when it issued 10.5 percent junk bonds in March 2009 to avoid a covenant breach.
We’d like to see a bit of leadership on production cuts. Earlier would be better.”
Smith cautioned in the company’s earnings release that the drought has increased grain costs significantly.
“While we ultimately expect to pass along rising input costs, these costs, coupled with continued soft demand, are likely to pressure earnings in 2013,” he said. “However, we still anticipate solid earnings for the year, and we are performing well during challenging circumstances.”
“It’s tough right now, but I’m confident we will come out of this in even better shape than we are today,” he said.
Tyson trimmed its full year sales outlook to $33 billion, down $1 billion from its previous forecast.
For the first nine months of the current fiscal year, Tyson reported net income of $398 million, or $1.07 a share, down from $653 million, or $1.71 a share, for the same period a year ago.
Business, Pages 23 on 08/07/2012