Tyson suffers $112 million loss during Q1
January 26, 2009
by Keith Nunes
SPRINGDALE, ARK. — Tyson Foods, Inc. suffered a significant loss during the first quarter of fiscal 2009 primarily due to high feed costs and commodity risk management activities in the grain and energy sectors of its Chicken division. For the quarter ended Dec. 27, 2008, the company recorded a loss of $112 million. The result compares unfavorably to the first quarter of fiscal 2008, when Tyson Foods had a net income of $34 million, equal to 12c per share of common stock. Sales for the quarter were $6,521 billion compared with $6,476 for the same period during fiscal 2008.
Within Tyson’s Chicken division, the company suffered a $286 million operating loss on $2.2 billion in sales during the quarter. The segment’s results were impacted by an increase in grain costs of $183 million and a net loss of $197 million from commodity risk management activities related to grain purchases as compared to the same period of fiscal 2008, according to the company. The division also experienced a loss of $18 million related to energy purchases during the quarter.
"While the first quarter of fiscal 2009 was clearly challenging, our Chicken segment fundamentals are improving," said Leland Tollett, interim president and chief executive officer. "When our demand began a noticeable decline, we reduced production by approximately 5% in early December. We also remain intensely focused on improvements in such areas as product mix, yields and efficiencies."
Tyson’s Beef division operating income was "breakeven," according to the company, on sales of $2.7 billion during the first quarter. The division’s results were positively impacted by increased average sales prices and lower average live animal prices as well as risk management activities related to futures contracts related to live cattle.
Within the company’s Pork and Prepared Foods segments, operating income was $55 million and $35 million, respectively. Pork segment sales were $878 million, and Prepared Foods sales were $746 million.
"We’ve experienced improvements in beef market conditions since December," Mr. Tollett said. "Pork margins are expected to remain above normalized levels, and we believe our Prepared Foods business will continue to experience solid returns because of the demand for processed meats such as pizza toppings, hams, bacons and lunch meat."