UPDATED: Tyson Foods Loss Widens in 2Q

by Susannah Patton  on Monday, May. 4, 2009 7:04 am  

Tyson Foods Inc. of Springdale widened its second-quarter loss amid economic challenges. The company said Monday that it lost $104 million, or 28 cents per share, during the second quarter, compared with $5 million, or 2 cents per share, during the same quarter last year. 

Sales slipped to $6.31 billion from $6.34 billion.

Despite the loss in earnings, Interim President and CEO Leland Tollett said the company is on the right track and is making significant progress.

"The second quarter was somewhat disappointing from an earnings standpoint," Tollett said on a conference call. "But I can say that our negative grain positions are mostly behind us, we've reduced inventory to targeted comfortable levels and we're expecting a normalized tax rate for the remainder of the year."

Tyson said the second-quarter loss includes a 2-cent charge for the closure of its Ponca City, Okla., beef plant in March and a 17-cent charge from a change in the method used to recognize interim income taxes.

In addition, the company said it experienced a pre-tax loss of $10 million when it sold Lakeside Farm Industries, its Canadian beef operation, in March.

The company's chicken segment reported a $46 million operating loss in the second quarter, compared with a loss of $45 million in the same quarter of 2008.

However, senior group vice president Donnie Smith said the chicken business began turning a profit in late February due to improved operational efficiencies, lower grain costs and a reduction in inventory.

Chicken sales rose 9 percent with a 15 percent increase in volume over the second quarter of 2008.

Prepared foods segment sales were $684 million in the second quarter, an increase of 5 percent over 2008. The bacon business was up 18 percent over a year ago and the Mexican Original tortilla business saw record profits in the second quarter, according to Smith.

The company's beef segment reported operating income of $28 million in the second quarter, while sales declined 11 percent and volume declined 3.2 percent. Operating results were impacted by lower average live prices, offset by lower average sales prices and decreased sales volume, according to Senior Group VP Jim Lochner. 

Beef sales were impacted by the reduced business experienced by casual and upscale dining segments, Lochner said.

The pork segment had an operating income of $29 million in the second quarter, impacted positively by increased average sales prices, offset by higher average live prices and decreased sales volume. Revenue for pork rose 2.4 percent while profit fell 58 percent.

Lochner said the pork demand has been impacted by the H1N1 influenza outbreak, which has been called "swine flu."

"We're monitoring the situation closely," he said. "Hopefully the demand will recover quickly as health officials disassociate (the virus) with pork products."



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