Tyson Foods reported fiscal third-quarter earnings on Monday, and even though the meat segments were a bright spot, high feed costs in its chicken business tempered the good news.
Tyson reported $9 million in earnings, or 3 cents per diluted share, in the three months ending June 28. That compares to earnings of $111 million, or 31 cents per share for the same quarter last year. Excluding certain items, the company had a profit of 1 cent per share, reports Meatingplace.com.
Analysts expected Tyson to earn 12 cents per share. Third-quarter revenue rose to $6.8 billion, from $6.6 billion last year.
The company's chicken group lost $44 million loss on $140 million of incremental grain costs. Tyson officials estimate the company will spend $550 million more on grain in fiscal 2008 than it did in 2007. The company has spent only $350 million of that feed estimate, so officials are looking for the fourth-quarter to post even worse results, Dick Bond, Tyson chief executive officer told investors. He also cited lagging prices in the breast-meat market. "Chicken won't be positive [in the fourth quarter] and losses will be greater than they were in the third quarter," he added.
Tyson's beef business showed a $3 million profit for the third quarter, but that compares with $36 million a year ago. The $3 million actually exceeded expectations. Injuring the effort was a $75 million charge related to the value of its forward cattle purchases and forward boxed-beef sales.
However, Bond pointed to the fourth quarter as offering strong potential. He cited an increasingly improved balance between domestic supply and demand, strong sales to South Korea and other foreign markets and a return of some $50 million related to hedging activities.
The company's pork earnings rose to $54 million, compared with $34 million in 2007. Lower average third-quarter live-hog prices and higher average sales prices were the reasons.
Prepared foods reported operating income of $6 million, compared with $58 million last year. Results were impacted by lower average sales prices and rising costs for wheat, dairy and cooking ingredients. The company also took a $7 million hit related to flood damage at its Jefferson, Wis., plant.
Source: Tyson Foods, Meatingplace.com