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Tyson earnings plunge; chicken segment costs citedLITTLE ROCK (AP)--Tyson Foods Inc., the world's largest meat company, said that third-quarter profit plunged 90 percent on the rising cost of grain to feed chicken and that it may take until next year to turn the trend around. The company earned $9 million, or 3 cents per share, compared with $111 million, or 31 cents per share, in the year-earlier period. Revenue rose to $6.8 billion from $6.6 billion. Excluding items, the company lost 1 cent per share in the third quarter, after earning 32 cents a year earlier. A survey by Thomson Financial, which generally excludes items, showed analysts expected Tyson to earn 12 cents per share on revenue of $6.99 billion in the period ended June 30. Shares dropped 93 cents, or almost 6 percent, to $15.30 in trading July 28. Tyson expects overall costs to increase an estimated $1 billion this year because of the skyrocketing costs of grain and other staples. Grain costs with which to feed chickens rose $140 million in the quarter, and are expected to jump $550 million for the whole of 2008, the company said. Tyson Chief Executive Officer Richard L. Bond said in a call with investors that Tyson's chicken business would need another quarter to revive. "Through (fiscal 2009) you will see our chicken business incrementally get better," Bond said. Bond said he believes the corn yield will surpass government estimates, helping take pressure off of buyers such as Tyson. The company will also be renegotiating contracts with its major customers, many of whom are paying bargain prices under contracts agreed upon before the steep inflation in grain. Bond also said the company anticipates continued improvement in beef. He noted that South Korea is again buying Tyson beef and that pork exports are strong, especially in sales to Japan, helped by the weak dollar. The company's beef, pork and prepared foods divisions partly offset losses in the chicken segment, he said. The chicken business lost $44 million in the quarter, mainly because of the cost of grain, raw materials, energy and logistics. It had sales of $2.3 billion, 33 percent of company revenue in the quarter. Beef had sales of $3.0 billion, accounting for 44 percent of company revenue in the period. The company said the division had operating income of $3 million and an operating loss of $73 million, though Tyson said a $75 million negative impact was related to forward cattle purchases and forward boxed beef sales. Pork sales were $926 million, accounting for 13 percent of company revenue, with operating income of $54 million. Tyson cited strong export sales as being among the reasons the division did well in the period. Prepared foods sales were $683 million, 10 percent of Tyson revenue with operating income of $6 million. The company said higher costs for wheat, dairy and cooking ingredients affected performance. 8/11/08 Date: 8/7/08 Advertisement
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