Springdale, AR - Poultry processor Tyson Foods Inc. reported sharply lower results for its fiscal second quarter ended in March but said it was encouraged by prospects for the remainder of the year.
The company made the comments in announcing results for its fiscal second quarter ended March 28, in which it reported earnings of $0.10 per diluted share, down 55% from the year-ago quarter's $0.22 per diluted share. On an aggregate basis, second-quarter net income fell to $23.3 million from $48.2 million in the year-ago period.
Second-quarter gross profit margins fell to 14.4% from last year's 16.7%, while sales rose to $1.87 billion from $1.57 billion last year, a gain of 18.8%.
In a statement, Tyson said the rise in sales was due mainly to the acquisition of Hudson Foods, resulting in an overall increase of 27.3% in total volume, partially offset by a 6.7% decrease in average sales prices.
The giant U.S. poultry-processing company also said its March quarter results were hurt by market oversupply, weakness in exports and the impact of its January 9, 1998, acquisition of rival Hudson Foods.
“We are not pleased with the operating results for the quarter, which were impacted by the excess supply of all meat proteins, weakness in the export markets and the quality of the Hudson Foods sales mix we inherited,” Leland Tollett, chairman and chief executive officer, said in a statement.
“Nevertheless, we are encouraged by our prospects for the remainder of the year,” he said.
“Poultry prices are beginning to improve and there has been a significant reduction in both corn and soybean meal prices,” Tollett said.
“We are pleased with the progress we've made in the assimilation of Hudson Foods and feel we are on track to capture the synergies we stated at the CAGNY conference in February,” he added, referring to a food industry conference.
Last August, the U.S. Department of Agriculture forced Hudson Foods, of Rogers, Ark., to recall 25 million pounds of beef, in connection with alleged contamination of the meat by the E. coli bacteria. It was the largest meat recall in U.S. history.
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