| Tyson Foods
Tyson Foods reports $5M loss for 2Q
By CHUCK BARTELS
AP Business Writer
LITTLE ROCK, Ark. - Tyson Foods Inc., the world's largest meat producer, said Monday it lost $5 million in its second-quarter as it faces high feed and fuel costs and absorbed charges for previously-disclosed plant closings.
Springdale-based Tyson lost 2 cents a share in the three months ended March 29 versus a profit of $68 million or 19 cents per share in same period a year ago. The loss includes $47 million in charges for plant closings and asset impairments, or 8 cents per share.
Tyson's sales were $6.61 billion compared with $6.50 billion in its second quarter a year ago.
Analysts polled by Thomson Financial had projected Tyson would earn a penny per share on revenues of $6.69 billion. Tyson offered no earnings guidance for the coming quarter or fiscal year. Last quarter, Tyson withdrew its guidance, largely because feed prices were too volatile. The company expects to pay as much as $1 billion more in fiscal 2008 for feed ingredients than in the prior year.
Tyson Foods President and CEO Richard L. Bond said that, despite the increased costs, the company had a strong quarter.
"Our second quarter results show the strength of a diversified protein business model," Bond said. "We continue to believe the second fiscal quarter should be our most challenging, and we are pleased with our results."
Bond again criticized government policy on ethanol production, saying the amount of fuel produced has a negligible impact on oil imports while the price of corn is skyrocketing, driving up the cost of food. He said the greatest impact is on the people who can least afford it. Also, Tyson and Pilgrim's Pride Corp., for instance, have cut jobs as they try to contain costs.
Prices have not caught up to the added costs that Tyson is facing, and Bond said prices on the consumer end will continue to rise. As those prices go up, Bond said Tyson will be well positioned as consumers try to save money.
"I think that chicken typically is one of your better values from the standpoint of protein. If there are tradeoffs, oftentimes you will trade to chicken," Bond said.
"Our chicken and pork exports continue to be strong, and we are moving forward with our strategy for international expansion," Bond said. The weak dollar has helped increase international demand, and Bond said the reopening of South Korea to U.S. beef will help starting in the third quarter.
"For the year, corn and soybean meal increases are likely to approach $600 million. Including other inputs such as cooking oil, breading and other feed ingredients, the increase in costs for the fiscal year may approach $1 billion compared to fiscal 2007," Bond said.
Its shares rose 46 cents, or 2.5 percent, to $18.61 in morning trading Monday.
"Being in multiple proteins is a good thing at this particular time," Bond said.
Beef, which accounts for 45 percent of Tyson Foods' sales, lost $11 million in the quarter, in part because of higher operating costs at a unit in Canada and a $17 million charge for restructuring the company's Emporia, Kan., plant. The segment also sustained an $8 million charge for an impairment of packaging equipment.
"Our beef segment improved $74 million over the first quarter of this fiscal year, or approximately $100 million excluding plant closing and asset impairment charges," Bond said.
Chicken accounts for 33 percent of the company's sales, $2.2 billion for the second quarter. The segment lost $61 million for the quarter, though sales increased in price and volume from a year before. Increased grain costs of $102 million hurt earnings for the quarter, as did a $13 million charge for closing a plant in Wilkesboro, N.C..
Pork accounted for 12 percent of Tyson sales for the quarter at $822 million, and the segment earned $20 million. The company said greater exports and lower average live prices helped the bottom line, though higher operating costs and lower sales prices partially offset gains. Bond said the segment had its best second quarter since being acquired in 2001.
Tyson's prepared foods segment earned $20 million and accounted for 10 percent of sales at $632 million for the period.
To help offset its higher costs, the company is cutting its capital expenditures for the year to $400 million from between $425 million and $475 million.  |