August 1, 2006

 

Tyson Foods ends quarter with US$52 million loss
 

 

Tyson Foods Inc on Monday (Jul 31) reported a wider-than-expected loss in the third quarter, weighed by one-time charges and losses in the chicken and beef sectors. The company also lowered its outlook for the year and its shares tumbled 6 percent.

 

Despite the disappoint performance, President and Chief Executive Richard L. Bond said the company was headed in the right direction with a US$200 million cost savings plan, a reduction in chicken production to compensate for a market glut, and a growing supply of cattle to meet demand. Japan's decision last week's decision to lift its ban on US beef would also help boost sales.

 

Tyson's loss for the quarter ended July 1 totaled US$52 million, compared with  a US$131 million profit during the same period last year.

 

The company's revenue fell 5 percent to US$6.38 billion from $6.71 billion last year.

 

Bond predicted chicken breast meat prices would rise for consumers, adding that under usual circumstances, breast meat prices should peak in June and July.

 

Beef results rose in May and June, but not enough to offset the April performance.

 

Tyson said the company's Canadian operations continue are still not out of the woods as the Canadian dollar remains strong.

 

The company said the oversupply of meat on the global market, caused by falling demand due to bird flu fears, is weighing on the company.

 

The third quarter remained challenging with losses in the chicken and beef segments, Bond said.

 

Bond also said increases in energy and health insurance expenses also dragged the company into losses.

 

Bond predicted that with greater efficiency, a leveling off of the meat supply, and better prices, the company would see a return to positive profit margins overall by late spring or early summer of next year.