Tyson Profit Plunges 40% on Beef Losses, Grain Costs
US - Tyson Foods Inc., the largest U.S. meat processor, said first-quarter profit plunged 40 percent on beef losses and higher corn costs. Earnings were better than analysts expected, and the shares rose the most in 18 months.
29 January 2008
1 minute read
* "The industry is clearly suffering from too few cattle, too much slaughter, and too little demand" |
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Wachovia Capital Markets LLC analyst, Jonathan P. Feeney.
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Net income in the three months ended Dec. 29 fell to $34 million, or 10 cents a share, from $57 million, or 16 cents, a year earlier, Springdale, Arkansas-based Tyson said today in a statement. Sales rose 3.2 percent to $6.77 billion.
Corn-feed prices are the highest ever as U.S. mandates for ethanol led to record demand for the crop-based fuel. Tyson said the increase in its full-year grain costs will top $500 million, exceeding an earlier forecast of $300 million. The company's losses on beef sales widened because meat prices haven't kept pace with higher costs for the cattle it slaughters.
"The industry is clearly suffering from too few cattle, too much slaughter, and too little demand," Wachovia Capital Markets LLC analyst Jonathan P. Feeney said in an e-mail. "The stock has already taken a beating, and the problems here are largely cyclical."
Tyson said results for the quarter included an $18 million gain from the sale of an investment and a $6 million cost related to severance charges. Excluding those one-time items, profit was 8 cents a share, spokesman Gary Mickelson said. That topped the 4-cent average estimate of 10 analysts in a Bloomberg survey.
Source: Bloomberg
