Meat major's earnings slip 40%
Tyson Foods Inc, the largest US meat company, said on Monday (local time) quarterly earnings fell 40 percent as its beef and chicken businesses were weighed down by higher costs, but strength in its pork unit allowed it to top Wall Street estimates and its shares moved higher.
The company withdrew its fiscal 2008 earnings guidance and said it expects rough times ahead, particularly in chicken, due to volatile grain prices. It said it would raise meat prices to offset higher feed grain costs.
The company said in November that the quarter ended in December would be its most challenging.
But on Monday, Chief Financial Officer Wade Miquelon told analysts in a conference call that, "as the situation stands today, (the current quarter) will likely be more challenging".
Much of the difficulties will be related to the chicken unit, he said.
For the fiscal first quarter ended Dec 29, Tyson earned $34 million, or 10 cents per share, a fall from $57 million, or 16 cents per share, a year earlier.
The results included a gain of $18 million from an investment sale, and severance charges of $6 million.
Analysts' average forecast was 3 cents per share before one-time items, according to Reuters Estimates.
Revenue increased to $6.77 billion from $6.56 billion a year earlier.
Jonathan Feeney, food analyst at Wachovia, said in a research note, "For the year, we were at 54 cents (per share) versus the street's 42.
"We'd expect the numbers to come down in light of tough beef and chicken conditions," he said.
Tyson said it expects feed costs for its chickens will be up by more than $500 million in fiscal 2008.
"We are raising prices because we cannot absorb these costs," Chief Executive Richard Bond said on a conference call with analysts.
Corn prices sped higher over the past year as more of the grain went to make the biofuel ethanol.
Agencies
(China Daily 01/30/2008 page17)
