Tyson facing a challenging fourth quarter

By Aidan Fortune

- Last updated on GMT

Tyson facing a challenging fourth quarter

Related tags Poultry

US processor Tyson has reported “short-term challenges” that it expects to impact fourth quarter earnings.

The challenges cited include margin compression related to a reversal of a gain on mark to market grain derivatives recognized in the third quarter, commodity market volatility, implementation of enhanced food safety initiatives, a beef processing plant fire​, and slower than expected operational improvements in the chicken segment. 

Despite these concerns, Tyson management believe that it can get back on track for 2020.

“The discrete challenges we’ve encountered this quarter now lead us to believe we will fall short of our previously stated guidance,”​ said Noel White, Tyson Foods’ president and CEO. “But our outlook for fiscal 2020 remains positive as we believe some of the challenges we’re experiencing are not expected to repeat, and we’re expecting more favorable market conditions as well.

“Our portfolio is structurally sound and generating strong sales volumes. Our volumes are strong in the back-to-school season while our case-ready beef and pork business continues to grow. Our international business is exceeding expectations as our legacy business outperforms the prior year and we continue to integrate Keystone and the newly acquired Thai and European assets.

“Our diversified portfolio is uniquely suited to respond to dynamic and challenging market conditions, and we continue to expect better performance in fiscal 2020. We’re very optimistic about our long-term potential as we focus on prepared foods growth, international growth and serving our customers.”

Earlier this week, Tyson announced investment in Brazilian poultry firm Grupo Vibra​ that will enable it to target more markets in Asia, Europe and the Middle East.

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