Tyson Foods reports a 15% decline in quarterly net income as COVID-19 disrupts production

Tyson Foods (NYSE: TSN) released its quarterly financial results on Monday that reported a 15% annualized decline in its net income in the second quarter as COVID-19 disrupted production. The company also announced to have secured a £1.21 billion loan facility.

Tyson Foods was reported 5% down in premarket trading on Monday.

Tyson Foods’ Q2 financial results versus analysts’ estimates

According to Refinitiv, experts had forecast the company to print £8.82 billion in revenue in the second quarter. Their estimate for earnings per share (EPS) was capped at 84 pence per share. In its financial report on Monday, Tyson Foods fell short of both estimates recording a lower £8.77 billion in revenue and 62 pence of earnings per share.

In the second quarter that ended on 28^th March, the food company posted £293 million in net income that came in significantly lower than £343 million in the same quarter last year. At £8.77 billion, however, its net sales noted a 4.3% increase in the recent quarter.

COVID-19 affected hundreds of Tyson’s workers that pushed the company into temporarily shutting down its plants to minimize the fast transmission of the flu-like virus. Amidst the pandemic, the company says, it is likely to see higher production costs and lower productivity. According to Tyson Foods:

“Operationally, we have and expect to continue to face slowdowns and temporary idling of production facilities from team member shortages or choices we make to ensure operational safety.”

The company also said that the demand from foodservice is likely to remain under pressure in Q2 as well that will fuel a further decline in volumes. While grocery stores report a higher demand as consumers avoid eating out, the increase, as per Tyson Foods, is not sufficient to offset the massive slump in demand from foodservice.

Tyson Foods expects demand for meat products to recover over time

Nonetheless, Tyson expressed confidence that despite COVID-19 driven challenges in the short-term, demand for the company’s meat products in the global market will recover over time.

At £48 per share, Tyson Foods is currently more than 30% down year to date in the stock market. The company dropped to as low as £35.50 per share in March. Its performance in 2019, on the contrary, was reported largely upbeat with an annual gain of roughly 65%.

At the time of writing, Tyson Foods has a market cap of £14.25 billion and a price to earnings ratio of 10.75.