Tyson Foods, Inc. (NYSE: TSN) reported better than expected results for the second quarter. As a result, the company increased its adjusted earnings forecast for the current year. Following the favorable news, the stock was higher in pre-market trading activities.
Tyson Foods revealed net income attributable to its shareholders of $432 million in the second quarter, up 39.4 percent from $310 million in the corresponding period last year. Similarly, its earnings jumped 46.7 percent to $1.10 a share from $0.75 a share in the year-ago quarter. This was $0.14 a share better than the Street analysts' expectations of $0.96 a share.
The company's top line fell 8.11 percent to $9.17 billion from $9.98 billion in the previous year quarter. This was also better than the Street predictions of $9.04 billion as analysts expected revenue drop of 9.4 percent in the first quarter.
Tyson Foods' President and CEO, Donnie Smith, said, "Our business continues to perform very well, delivering record second quarter operating income and return on sales, in what is typically the most challenging quarter of our fiscal year. Sales are growing in key retail product lines. The pricing and marketing investments we've made are paying off in increased volumes in strategic products including Hillshire Farm smoked sausage and lunchmeat, Jimmy Dean breakfast sausage and Ball Park hot dogs."
He continued, "With a focus on the longer term, we have a three-year pipeline of innovation across all segments with exciting new product launches to keep our offerings in the retail, food service and international channels relevant to consumers. We've differentiated our chicken business by being more consumer driven, upgrading our mix, diversifying our pricing mechanisms, improving our cost structure, implementing our ‘Buy vs. Grow' strategy and providing industry-leading quality and customer service. Because of the actions we've taken, and because those actions have proven to produce higher, more stable margins, we're raising the annual normalized margin range for the Chicken segment to 9-11%."
The CEO said further, "Solid performances by all of our segments provided strong cash flows, of which we used $400 million to repurchase 6.9 million shares during the quarter. We captured $144 million in synergies, with $67 million incremental to fiscal second quarter 2015. We're in a great position, and we're generating momentum that will take us into 2017 and beyond. We've produced record results in the first half of the fiscal year, and we expect continued strong performance in the second half."
Going forward, Tyson foods said it was boosting its adjusted earnings forecast to $4.20-4.30 per share for the full year 2016. This was way ahead of the Street analysts' estimations of $4.06 a share.
Following the news, shares of the company traded 4 percent higher in the pre-market.
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