CHICAGO (Reuters) - Tyson Foods Inc (TSN.N) is shipping meat to China and has additional orders on the books as a fatal pig disease has created a pork shortage there, the company said on Thursday as it reported lower-than-expected quarterly sales.
Shares fell 3% and hit their lowest in more than three months as Tyson also said it would eliminate 500 jobs as part of a restructuring.
Tyson is competing with other global companies to supply meat to China, the world’s largest pork consumer, as an outbreak of African swine fever has decimated the Chinese herd.
Separately, an outbreak of coronavirus in people has seen cities quarantined in China, disrupted shipments at ports and raised uncertainty about demand among traders. However, buying interest has still been strong, Tyson Chief Executive Noel White told analysts on a conference call.
Tyson is also selling pork to other countries that have seen their typical supply chains disrupted by China’s increased buying, he said.
“We’re filling additional orders to China and we’ve seen year-over-year increases of nearly 600% in the first quarter,” White said.
Beijing imposed retaliatory tariffs on U.S. pork in 2018 amid a prolonged trade dispute between the two countries.
U.S. exports to China and Hong Kong still reached 110,876 tonnes in December, more than quadruple the volume a year earlier, according to industry figures.
China said it would halve additional tariffs levied against U.S. goods last year, following the signing of a Phase 1 deal in January that brought a truce to the bruising trade war.
“If tariffs are lifted or reduced we would likely see an acceleration of already increased global demand for pork, beef and chicken,” White said.
Net income attributable to Tyson rose to $557 million, or $1.52 per share, in the first quarter ended on Dec. 28, from $551 million, or $1.50 per share, a year earlier.
Sales rose 6.1% to $10.82 billion, but fell short of analysts’ estimates of $11.04 billion, according to IBES data from Refinitiv. Excluding items, the company earned $1.66 per share, in line with expectations.
Beef sales volume fell 8% as a Kansas slaughterhouse fire last year limited Tyson’s ability to process cattle for most of the quarter. The slaughterhouse has since resumed operations.
Tyson separately eliminated 500 positions across several areas and job levels, according to a regulatory filing. Most of the positions were in corporate offices in Chicago and Springdale, Arkansas, home of Tyson’s headquarters, the filing said.
Reporting by Tom Polansek in Chicago. Additional reporting by Uday Sampath in Bengaluru; Editing by Maju Samuel and Bernadette Baum