(AP) Changes at Tyson Foods over the past year have begun to help the bottom line of the world's largest meat producer, which posted a strong third-quarter profit this week.
Tyson earned $134 million, or 35 cents per share, compared with $9 million, or 3 cents per share, a year earlier, mainly through its chicken business.
Earnings from continuing operations were $127 million, or 33 cents per share, compared with a loss of $3 million, or a penny per share. The company has closed some operations, cleared excess inventory and put in place other cuts.
Springdale, Arkansas-based Tyson says sales dropped 3 percent to $6.66 billion from $6.85 billion on declines in beef and pork sales. Tyson’s Pork Group recently announced they will sell five of the company’s hog farms and trim its sow numbers by 20,000.
Starting about a year ago, Tyson began changing the terms of its contracts with major customers, no longer allowing them to lock in long-term low prices. The company took a beating when grain prices spiked last year and it had to fill orders without raising prices.
"We will manage this business on a shorter-term proposition than we had in the past," said Leland Tollett, interim president and chief executive, who was brought in last January in hope of reversing the company's fortunes.
Tollett logged his 40 years with Tyson when chicken was its focus, and it was that segment that was in the most trouble when he returned. He was CEO from 1995 through 1998.
"It's starting to get fun around here, and I don't see any reason it can't continue," Tollett told investors on a conference call.
However, Tollett cautioned that the fourth quarter will not be as rosy as the third. He noted that the company is still seeing signs of a recessionary economy, with sales to retailers holding up better than sales to fast-food restaurants, and sales to fast-food restaurants stronger than those to full-service dining operations.
Tyson weathered a $1 billion jump in feed costs last year. Though commodity prices have fallen, unexpected developments could still bring sharp price increases, said analyst Brian Hoops, president of Midwest Market Solutions Inc. in Yankton, S.D.
Source: Associated Press