September 6, 2007

 

Beef business drains profits but Tyson remains optimistic
 

 

Higher live cattle costs is expected to depress earnings for fiscal 2007, Springdale, Arkansas-based Tyson Foods announced.

 

The company, the second largest processor in the US, suffered a fall in beef revenues, largely due to an interruption in the South Korean beef trade.

 

Tyson Foods blamed higher than expected live cattle costs and slower revenues in the beef business as the cause for lower expected earnings for fiscal year 2007.

 

The company raised chicken prices in the initial period of the current fiscal year, leading to lower sales as a result. To offset this loss, the company is pushing sales of higher valued products.

 

This week, Tyson would also detail at a Lehman Brothers consumer conference on how it would achieve a US$700 million rise in pre-tax earnings in fiscal 2007 despite absorbing nearly US$300 million additional grain cost.

 

Tyson has been enjoying three profitable quarters of the current fiscal year, reporting a net profit of US$236 million during the period. Sales rose to US$20.01 billion from US$19.08 billion the same period last year.

 

Tyson shut down or sold off several plants during the period while continuing the cost-cutting measures implemented in 2006 that may save the company US$250 million in fiscal 2007.

 

Besides cost cutting, Tyson is also rolling out new product initiatives such as its " 100 percent All Natural, Raised Without Antibiotics" chicken, which generated new sales accounts.

 

The company also converted its entire line of marinated, uncooked chicken to 100 percent All Natural to meet growing needs in all natural foods.

 

At the same time, Tyson is also launching a new advertising campaign in support of the new product line-up.

 

Tyson also hopes to build up its strength in its commodities business, strengthen its international network and explore the translation of raw materials and by-products into high margin initiatives.