Tyson Foods Inc. (NYSE: TSN) reported second-quarter fiscal 2020 results before markets opened Monday. The food processing company posted adjusted earnings per share (EPS) of $0.77 on revenues of $10.89 billion. In the same period a year ago, the company reported EPS of $1.2 on revenues of $10.44 billion. Third-quarter results also compare to consensus estimates for EPS of $1.04 and $10.96 billion in revenues.

A week ago, company chair John Tyson warned, “The food supply chain is breaking.” As COVID-19 spread to food processors like Tyson Foods, plants were shut down and animals that would normally have been slaughtered and packaged have instead been “depopulated” by the millions.

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In its outlook for the remainder of 2020, the company said that the challenges related to COVID-19 are expected to increase operating costs and have a negative effect on volumes. In the short term, Tyson expects lower productivity and higher production costs until the effects of the pandemic diminish.

CEO Noel White commented:

During the quarter, we witnessed an unprecedented shift in demand from foodservice to retail, temporary plant closures, reduced team member attendance, and supply chain volatility as a result of the virus. Despite these challenges, we were able to adjust our product mix and redirect products to the appropriate channels.

While we cannot anticipate how long the challenges presented by COVID-19 will persist, we remain focused on driving long-term growth. Our solid balance sheet, ample liquidity, scale and diversity continue to give us confidence in our long-term outlook.

The company said it received a term-loan facility of $1.5 billion and that at the end of March had $2.5 billion in available liquidity.

In the company’s beef segment, sales volume was higher but operating income decreased due to volatile market conditions, higher operating costs and approximately $55 million in derivative losses. In the pork segment, sales volume was also higher and operating income was flat.

Sales of chicken decreased, and so did operating income due to “challenging pricing conditions, an increase of about $40 million in feed costs, restructuring costs of $21 million and derivative losses. In the prepared food segment, sales volume was flat and operating income declined due to higher costs and derivative losses.

For the 2020 fiscal year, Tyson said that the U.S. Department of Agriculture expects domestic meat production to increase by 3% to 4% year over year. The company said it expects export markets to absorb much of the increase.

Analysts are looking for EPS of $1.37 in the third quarter on sales of $10.8 billion. For the full year, the consensus estimates call for EPS of $5.90 and revenues of $44.36 billion.

Shares traded down about 3.6% in Monday’s premarket session at $57.87. The 52-week range is $42.57 to $94.24, and the 12-month consensus price target on the stock is $79.09.

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