US poultry giants brace for the hard times
Two of the largest American poultry employers are feeling the severe impact of the economic crisis as they announce losses and financial trouncing.
The latest to announce big losses is Tyson Foods Inc., last week declared a US$91 million loss of its chicken business in the fourth quarter of the fiscal year 2008, citing high grain costs as the culprit.
Tyson said grain costs for the fourth quarter were about US$230 million more than in the same time of fiscal 2007.
On the other hand, Pilgrim's Pride earlier said it was able to obtain a temporary waiver extension that allows it to meet debt obligations for its current loans. The extension is until November 26.
Pilgrim's Pride has 1,621 employees according to 2007 figures provided by the Economic Development Partnership of Alabama.
Tyson was the fourth-biggest employer with 856 employees.
Moody's Investors Service has downgraded Tyson Foods Inc. from Ba3 to Ba1 on concerns that the company's chicken segment will lose more money and that its foreign investment will limit its available cash.
The financial firm also said outlook for the Springdale, Ark.-based company is negative.
Tyson is expected to incur a significant loss in its chicken business and an overall loss of its business by the first quarter of 2009, according to Moody's.
It added that Tyson's acquisition strategy could keep the company from reducing its debt.
Tyson operates poultry processing plants in Albertville and Blountsville.
Despite the financial beating, Tyson President and Chief Executive Officer Dick Bond said the company doesn't plan major cuts because it sees overall good demand.
In a statement, he said the company "will continue to evaluate this and we do continue to evaluate it all the time".
Bond added that "As of right now, we still believe that demand-supply balance for us is still reasonably good."
Pilgrim's Pride meanwhile appointed William K. Snyder as its chief restructuring officer. He will help the company meet its goals of reducing costs and improving long-term liquidity.
The nation's largest poultry company, Pilgrim's Pride bought Gold Kist in 2007.
Texas-based Pilgrim's Pride earlier this year cut its turkey division to focus more on poultry.