Tyson Foods (TSN) disclosed a deeper-than-expected 61% plunge in fiscal third-quarter earnings due to charges on Monday and the meat producer trimmed its full-year sales view amid the ongoing U.S. drought.
Shares of the seller of beef, pork and chicken slumped almost 2% in the wake of the earnings miss and guidance downgrade.
Tyson said it earned $76 million, or 21 cents a share, last quarter, compared with a profit of $196 million, or 51 cents a share, a year earlier. Excluding one-time items, it earned 50 cents a share, missing the Street’s view of 54 cents.
Revenue inched up almost 1% to $8.31 billion, trailing consensus calls from analysts for $8.72 billion.
"We produced solid results in our fiscal third quarter despite softer than expected domestic demand for protein,” CEO Donnie Smith said in a statement.
Looking ahead, Tyson cut its fiscal 2012 sales view to about $32 billion from $33 billion due to weak domestic protein demand and higher input costs caused by the drought. The new sales target would widely trail the Street’s view by $2 billion.
Management also projected fiscal 2013 sales of $35 billion, which is just shy of estimates on Wall Street for $35.4 billion.
Tyson acknowledged the rapid rise of grain costs caused by the ongoing drought in the U.S.
“While we ultimately expect to pass along rising input costs, these costs, coupled with continued soft demand, are likely to pressure earnings in 2013,” Smith said.
Still, Smith expressed confidence that Tyson can outperform its industry despite existing challenges.
“We can't make it rain, but we can execute against our strategy by producing high quality foods using innovative and cost effective processes,” said Smith.
Shares of Springdale, Ariz.-based Tyson slid 1.62% to $15.11 in morning trading, putting them on track to extend their 2012 tumble of about 25%.