Tyson Foods expects coronavirus to further limit meat supply

Yahoo Finance’s Heidi Chung joins Zack Guzman to discuss how the coronavirus is impacting Tyson Foods latest quarterly earnings report.

Video Transcript

ZACK GUZMAN: Welcome back to live market coverage here on Yahoo Finance. I'm Zach Guzman. Right now we have the Dow off by about 1% as we continue to get updates from a lot of companies as this is earnings season, and this morning we got an update from one of the largest food companies in the United States, Tyson Foods delivering earnings, as well as an interesting move in the stock price of Tyson right now. We're seeing shares off by about 8% when you look at those after the company did announce earnings that are quite interesting considering all the issues on the supply front right now as they deal with production facilities shut down due to outbreaks of coronavirus.

And for more on what the company reported, I want to get to our own Heidi Chung who has the details in the latest quarter. Heidi.

HEIDI CHUNG: Hey, Zack. Yeah, like you mentioned, shares are off about 8%, but really the losses accelerated during the conference call earlier today. And like we expected, it was not a great quarter. And also like we expected, the company was not able to provide financial guidance amid this COVID-19 outbreak.

But what we did learn was that during the fiscal second quarter, revenue was actually up 4% from last year to $10.89 billion, and adjusted earnings per share down 36% from last year to $0.77 per share.

Now Tyson's second-quarter results of course come as the US meat industry really gets hammered by this coronavirus outbreak, but it's very important to note that things really started to hit the meat industry in April, and the second-quarter results don't really capture all of the damage that was being done. So what we do know is Tyson has been very vocal about the entire meat industry and how the meat-- excuse me, the food supply is being affected by the COVID-19 outbreak.

And also regarding those closures of some of its processing facilities in Washington, Iowa, and Indiana over the last month or so, Tyson saying that it does expect the lower levels of productivity to persist amid the crisis. CEO Noel White saying in a statement, quote, "During the quarter, we witnessed an unprecedented shift in demand from food service to retail. Temporary plant closures reduced team-member attendance and supply-chain volatility as a result of the virus. While we cannot anticipate how long the challenges presented by COVID-19 will persist, we remain focused on driving long-term growth."

Tyson also expecting the pandemic to create even more disruption, which will increase costs and negatively impact volumes for the rest of the fiscal year. White saying on the conference call that the current conditions-- with the current conditions, recovery is expected to start in the fiscal fourth quarter. So far the company has laid off and furloughed zero employees.

White also saying that Tyson's facilities have shifted millions of pounds per week from food-service production channels into retail demand amid the pandemic.

Panic buying, though, has subsided, Zack, but the company is still seeing 15% to 40% volume increases for some products. However, that gain in retail is not going to be able to offset the damages and impact that the company is seeing on the food-services front. And that, in fact, will lead to negative year-over-year growth for Tyson in the second half of the fiscal year.

Tyson president, though, saying that it does expect somewhat of a U-shaped recovery. But judging by all of the analyst commentary that we've seen, they were quite surprised that management was so very doom and gloom on this earnings release.

ZACK GUZMAN: All right, Heidi Chung bringing us the latest there in terms of Tyson's overall numbers.