December 2, 2009

Tyson Foods Inc., the world's largest meat producer, has reported a hefty impairment charge in its beef business left it with a loss for the fourth quarter but said its sales rose and its chicken business was profitable for the second straight quarter.

Chief Operating Officer Jim Lochner said he expects an improving economy will lead to improved 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 pricing.

Tyson lost US$455 million, or US$1.22 per share, for the three months ended Oct. 3. That compares with a profit of US$48 million, or 13 cents per share, a year ago, the company reported Nov. 23.

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.

The performance beat the expectations of analysts surveyed by Thomson Reuters, who forecast a profit of 26 cents per share on revenue of US$6.88 billion.

Its shares rose 21 cents to US$13.28 in premarket trading.

Tyson, based in Springdale, Ark., 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.