Tyson Foods Q4 impaired by heavy beef charge

 

 

Tyson Foods Inc., the world's largest meat producer, said Monday (Nov 23) that a hefty charge in its beef business left it with a loss for the fourth quarter.

 

But sales rose, and its chicken business was profitable for the second straight quarter.

 

Tyson Foods chief operating officer Jim Lochner expects an improving economy which will lead to better demand next year for not only chicken, but beef and pork products as well.

 

The industry overall is improving on falling commodity costs and production cuts, which help bolster prices.

 

Tyson lost US$455 million, or US$1.22 per share, for the three months ended October 3. That compares with a profit of US$48 million, or 13 cents per share, a year ago.

 

Excluding the impairment charge of US$1.50 per share, earnings were 28 cents per share. The company said recent disruptions in the global credit markets and weaker economic conditions forced it to reduce the goodwill valuation of its beef business.

 

Sales rose slightly to US$7.21 billion from US$7.2 billion, with chicken sales up 11 percent to US$2.64 billion from US$2.38 billion.

 

Excluding the charge, Tyson's performance beat the expectations of analysts who forecast a profit of 26 cents per share on revenue of $6.88 billion.

 

Tyson, based in Springdale, Arkansas, anticipates better chicken prices in 2010 on lower cold storage inventories and expects grain prices to fall.

 

Raw material costs are predicted to climb for the prepared foods segment, but Tyson said it has shifted its sales contracts away from fixed pricing, which will help absorb the increasing costs.

 

For the year, Tyson reported a loss of US$537 million, or US$1.44 per share, compared with a profit of US$86 million, or 24 cents per share, the year before. Adjusted earnings were 6 cents per share after removing the impairment charge. Annual sales dipped 1 percent to US$26.7 billion from US$26.86 billion.