Beef results torpedo Tyson profits
by Pete Hisey
on 1/31/2006 for Meatingplace.com
Tyson Foods missed Wall Street profit projections by a substantial amount in the first quarter ended Dec. 31, in large part because of “ugly” results in its beef business.The company earned 11 cents per share in the quarter, down from 14 cents a year ago, and far below the 16 cents predicted by Wall Street analysts. Its stock immediately dove nearly 8 percent on the news, down $1.20 to $14.17 early Monday.Sales for the quarter were flat at $6.5 billion, while net profits sank to $39 million from $48 million a year ago. According to John Tyson, chief executive, results in chicken and prepared foods improved from a year ago, but “pork struggled and beef further deteriorated, producing significant operating losses. Recent declines in international demand for chicken coupled with greater than expected domestic supply will dramatically impact the projected performance of our chicken segment, [and] lower than projected cattle supplies, along with unanticipated interruptions in export market access, will slow the recovery we expected for beef later in the year.” Beef produced a loss of $64 million in operating income, compared to a loss of $16 million a year ago. That more than offset a gain in operating income in the chicken segment, to $123 million from $104 million. Pork showed a decline in operating income, to $11 million from $14 million, while prepared foods, despite a drop in gross sales, doubled its operating income to $24 million from $12 million.