Tyson Profit Slumps
92% on Higher Grain-Feed Costs
By Choy Leng Yeong
Bloomberg
July 28, 2008
(Bloomberg) -- Tyson Foods Inc., the second-largest
Net income in the three months through June declined to $9
million, or 3 cents a share, from $111 million, or 31 cents, a year earlier,
Springdale, Arkansas-based Tyson said today in a statement. Sales gained 3.5
percent to $6.85 billion.
Chief Executive Officer Richard L. Bond couldn't increase
prices fast enough to make up for rising animal-feed expenses. The chicken
unit, the biggest profit contributor last year, posted an operating loss of $44
million, its second loss in a row. Pilgrim's Pride Corp. and other chicken
producers have been reducing output to boost prices.
``Profitability in the chicken business has been very poor
for the bulk of the past two quarters,'' Stephens Inc. analyst Farha Aslam said in a July 24
report. ``Chicken producers must be very diligent about reducing production
through a combination of head and weight.''
Tyson rose 10 cents to $16.23 on July 25 in New York Stock
Exchange composite trading. The shares have increased 5.9 percent this year.
(Tyson scheduled a call with investors and analysts at 9
a.m.
bloomberg.com
Tyson's profit falls
on higher grain costs
By MarketWatch
July 28, 2008
Tyson posted a fiscal third-quarter profit of $9 million, or 3 cents a share, compared with a profit of $111 million, or 31 cents a share, a year ago. Sales rose 3.5% to $6.85 billion.
Wall Street estimated Tyson would earn 12 cents a share on revenue of $7 billion, according to a FactSet Research analyst survey.
Tyson, which sells beef, chicken and pork, said grain costs
were up $140 million compared to the year-ago quarter and are expected to rise $550 million in fiscal 2008. Tyson has had problems
raising its prices fast enough to cover the jump in feed grain expenses. To
help cope with the rise in grain prices, Tyson sold its meat business in
For the quarter ended June 28, Tyson's chicken business posted an operating loss of $44 million, while its beef unit had an operating profit of $3 million and its pork business had an operating profit of $54 million.
Tyson shares are up almost 7% year-to-date, largely boosted by gains this month. They closed Friday at $16.23
marketwatch.com
Tyson awaits ‘hard time lift’
Mark Gongloff
Ahead of the Tape
Wall Street Journal
July 28, 2008
Tyson Still Awaits
Lift Typical in Hard Times
In tight economies, consumers typically tighten their purses and eat more chicken. Analysts say that isn't happening yet.
It's one of several trends hurting Tyson Foods, which reports third-quarter results Monday. Chicken volumes have been down, and Tyson, the chicken giant, is being squeezed by higher feed costs.
Analysts expect it to report that earnings per share fell 61%, to 12 cents per share.
Tyson's troubles are bad news for consumers. The high commodity prices that go into its feed, and industry-wide production cuts in chicken, means buyers are finding chicken prices on the rise.
Tyson's beef business -- which makes up about 45% of its sales -- is facing strain too. And with supplies tightening, supermarket beef prices are set to rise. That means more skimping by consumers that could keep plucking Tyson's earnings into 2009.
In light of it all, tofu might sound like a good alternative. But soy prices are up, too.
--Jeff D. Opdyke
Oil vs. Banks: A
Fight With No Winners
Halfway through earnings season, it's become pretty clear how this one is going to play out: Another bar fight between the energy and financial sectors that puts everybody in the middle at risk.
With 249 reporting so far, companies in the S&P 500 are on pace to see earnings per share fall 17.9% from a year ago, according to Thomson Reuters. That figure includes estimates for companies that haven't reported yet. It's a bit worse than the 17.1% first-quarter fall and marks the fourth-straight quarter of shrinking earnings, one quarter shy of a record. Analysts again were too rosy in their forecasts; when reporting season began, they expected a decline of 11.5%.
In profits, as in stock prices, financials have been eviscerated, while energy has frolicked in cash.
Strip out financials and energy, and S&P 500 earnings are on pace for a meager 2.8% increase. Lose the troubled home builders and auto makers for an even more finely tuned measure of "core" profits, and the gain improves to 5.4%.
Core earnings have decelerated this year due to higher costs, slower sales and other woes. As recently as the fourth quarter, S&P 500 earnings ex-financials, energy, home builders and autos were up 11.3%. Ex-energy and financials, earnings rose 9.7%.
"Profitability is not falling off a cliff outside of the disaster areas," says Brian Rauscher, director of portfolio strategy at Brown Brothers Harriman. "It's been more like an iceberg melting -- it's been glacial."
Core profits could keep dripping away. The full
Having learned nothing despite repeated burns from hot stoves, analysts doggedly continue to forecast a stirring earnings rebound in the second half. There's no reason to believe they'll be right this time.
online.wsj.com