What Impacted Meat Producers’ Revenue in the Recent Quarter?



Revenue took a toll in the recent quarter

Among the four meat producers that we’re discussing in this series, none of them enjoyed good revenue in the current quarter. Tyson Foods’ (TSN) divestiture of a few of its non-core businesses caused a 15% decline in its fiscal 1Q16 revenue. It even missed analysts’ estimates. The sales volume also fell 1%. It sold more value-added products, processed fewer cattle, and upgraded its mix to higher profitable sales. This result excluded the effect of divestitures.

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Pilgrim’s Pride’s (PPC) revenue fell 7%. The company’s US operations were the source of nearly 84% of the company’s total revenue. It represented a YoY (year-over-year) fall of 11.7%. However, the revenue from the Mexican business contributed 15.1% of the total revenue at $297 million—up by 33% YoY.

In its recent quarter, Hormel Foods’ (HRL) revenue fell 4.2%. It missed analysts’ estimates by ~4%. The fall was due to lower pork markets and lower turkey harvest levels. The markets were still recovering from the avian influenza outbreak in 2015. Hormel’s revenue grew 5% at a compound annual growth rate over the last five years.

Sanderson Farms’ (SAFM) net sales fell 9.2% YoY this quarter. The sales for the quarter were hurt by weak product prices and lower export volumes. The factors that negatively impacted the export demand were the strong US dollar and avian influenza-related bans.

The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) and the PowerShares S&P 500 High-Quality Portfolio (SPHQ) invest 2.6% and 1.5% of their portfolios in Hormel Foods.

Next, we’ll discuss how these meat producers plan to drive growth in the future.


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