Tuesday, November 24, 2009

Tyson Foods Posts a Slim Profit, but Its Chicken Business Lags

Tyson Foods reported disappointing margins for its chicken business on Monday as market prices fell and grain costs rose.

Skip to next paragraph Enlarge This Image Spencer Tirey for The New York Times

Workers at a Tyson plant in Arkansas inspect frozen chicken breast fillets. Falling prices and rising costs hurt the company.

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The company reported a quarterly profit after one-time items that beat Wall Street expectations on the strength of its beef and pork businesses, but investors focused on the performance of its poultry operations, which came in well below that of rivals like Pilgrim’s Pride.

Donnie Smith, a veteran at the company who became chief executive last week, said in a conference call that the chicken business should improve in 2010, but added that the company would need to increase volume and do a better job of managing inventory.

“It’s important to remember that we significantly reduced inventory in 2009, so to keep up with current domestic demand, we’ll have to produce this year what we took out of inventory last year,” Mr. Smith said. “We’ll be doing what we should be doing, which is selling what we produce and not confusing the freezer with the customer.”

Earlier on Monday, Pilgrim’s Pride reported a quarterly profit, reversing a year-earlier loss.

Tyson reported a net loss of $455 million, or $1.22 a share, for its fiscal fourth quarter, ended on Oct. 3, compared with a year-earlier profit of $48 million, or 13 cents a share.

Excluding a good-will impairment charge for its beef business, Tyson earned 28 cents a share, beating the analysts’ average estimate of 26 cents, according to Thomson Reuters.

Revenue at Tyson rose slightly, to $7.21 billion from $7.20 billion. Analysts on average were expecting $6.88 billion.

Operating margins at the chicken segment came in at 1.2 percent, much below analysts’ forecasts.

Tyson expects the strength in its pork and beef businesses to continue in its new fiscal year and said that it saw a chance for the economy to improve in the last half of the year.

Tyson’s stock fell 19 cents, to $12.88.

Tyson Foods Posts a Slim Profit, but Its Chicken Business Lags

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