Tyson Cuts Forecast on Higher Cattle, Hog Expenses
US - Tyson Foods Inc., the biggest U.S. meat processor, cut its 2007 earnings forecast because of higher cattle and hog costs and a disruption in beef exports to South Korea. The shares fell the most in six years.
6 September 2007
2 minute read
Earnings will be 72 cents to 80 cents a share in the year ending Sept. 30, Springdale, Arkansas-based Tyson Foods said today in a statement. That's less than the 82 cents to 92 cents the company predicted in July.
``There is always a lot of volatility in the meat business,'' said Tim Ramey, senior research analyst with D.A. Davidson & Co. in Lake Oswego, Oregon. Ramey was expecting annual earnings of 93 cents a share.
Chief Executive Officer Richard Bond has closed or sold processing plants that weren't meeting profit goals, and instituted other cost-cutting measures that will reduce expenses by more than $250 million this year, the company said. While Tyson had a loss in fiscal 2006, all business segments are expected to show a profit in the fourth quarter, it said.
Shares Plunge
Tyson Foods fell $2.55, or 12 percent, to $19.46 at 12:34 p.m. in New York Stock Exchange composite trading. A close at that level would be the biggest one-day decline since June 18, 2001. Before today, the shares had gained 49 percent in the past year.
For the full year, Tyson was expected to earn 86 cents, the average estimate of 12 analysts surveyed by Bloomberg.
Tyson said it has absorbed almost $300 million in additional grain costs this year, mostly to feed poultry. Some poultry sales were lost after chicken prices were raised earlier in the fiscal year, Bond, 60, said in the statement. Tyson's loss last year was $196 million, or 58 cents a share.
Source: Bloomberg
