November 14, 2006


Tyson Foods posts losses for third straight quarter



Richard Bond, president of CEO of Tyson, is glad fiscal 2006 is finally over.


The world's largest meat processor forecast a return to profitability this fiscal year, however, after three straight quarters of losses. Tyson reported a wider-than-expected loss in the fiscal fourth quarter, weighed by one-time charges and losses in the chicken and beef sectors.


The loss for the quarter ended Sep 30 was US$56 million, compared with a profit of US$117 million during the same period a year earlier.


Tyson announced a slew of cost cutting measures amounting to US$200 million in July and promised to focus on value-added products, international expansion and improving operational efficiencies.


Still, fourth quarter revenue remained stagnant at US$6.5 billion.


For most of the year, the company was hampered by supply and demand imbalance and export market disruptions in its chicken and beef segments, Bond said in a statement. The chief problem was the oversupply in the chicken and beef markets, a problem that has been around throughout the year.


One silver lining amidst these troubles is the fact that Tyson's core business showed improvement and continued to strengthen.


Bond said he is "very confident" the company will be profitable again starting in the current quarter.


While Tyson incurred losses in its beef, chicken and prepared foods sector, its pork business, accounting for 12 percent of sales, posted an operating profit, thanks to low prices for live animals.


Shifting diets, beef and chicken diseases that reduced exports and overproduction due to attractive prices were the main factors accounting for the glut in supply, according to economists.


Tyson also warned that rising corn prices could mean higher prices for chicken, beef and pork next year.


Bond said consumers are going to have to pay more for protein as new levels of corn are not likely to go back to 2006 level. Meat producers, processors and retailers would have to pass the higher grain price on to consumers, he continued.


Bond suggested the higher prices could come when meat demand typically increases during the spring and summer.

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