Tyson Foods Inc. (NYSE:
Behind the scenes, the company continues to face questions around an industry benchmark for poultry prices and a resulting lawsuit over chicken pricing.
Nothing To See Here
According to Smith and Hayes said the pricing controversy did not factor into the CEO change and added that the company’s prospects were excellent.
On a conference call to analysts, Hayes said, “The timing I think from everybody’s perspective couldn’t be better given the great shape that Donnie’s brought the company to.”
Analysts, none-the-less, questioned the company’s ability to sustain growth given the numbers.
Following record profits for 4 straight years, Tyson now projects earnings between $4.70 and $4.85 a share. Thomson Reuters analysts estimated earnings of $4.98 per share.
Tyson execs said the 3.2% sales decline was due to a quarterly sales decline, planned production slowdown and a bump in the cost of soybean meal, which is used in chicken feed.
Georgia Dock Index
Investors, however, say the way the Georgia Dock index is compiled has keep the price of chicken artificially high. Last month Maplevale Farms, a food service company in upstate New York filed a class action lawsuit claiming big chicken companies were engaging in price fixing.
Revenue dropped to $9.16 billion from $10.51 billion and under the FactSet consensus of $9.40 billion. Looking ahead Tyson expects adjusted EPS growth of 7% to 10% in 2017. The FactSet consensus calls for 14% growth.
War On Water Pollution
On top of everything else, Tyson and other large meat producers, including Perdue Farms, Smithfield Foods and JBS
The pressure comes a month after Hurricane Matthew flooded manure lagoons and left behind drowned hog, chicken and turkey carcasses, which increased water contamination risks in the U.S. Southeast