US: Feed costs, hedging losses hit Tyson
Tyson Foods, the world's largest meat processor, today (26 January) posted a quarterly loss on the back of rising feed costs and losses from grain hedging.
The US meat giant booked a first-quarter net loss of US$112m for the three months to 27 December.
The result came amid losses from Tyson's chicken division, was which hurt by grain costs, which rose $183m.
Tyson reported an operating loss of $286m from its chicken business, against a profit of $48m a year ago. Chicken sales were boosted by higher prices and rose from $2.1bn to $2.23bn.
Group revenue was up from $6.48bn a year ago to $6.52bn, Tyson said.
The company's beef unit broke even despite sales falling from $2.86bn to $2.66bn as the group's hedging activities boosted earnings from this part of the business.
Tyson's hedging, however, hit its pork profits, which fell from $79m to $55m. Revenue from the division rose from $836m to $878m.
Operating earnings from Tyson's prepared foods business were flat at $35m. Revenue from the unit rose from $677m to $746m.
Earlier this month, Tyson announced that president and CEO Dick Bond had decided to leave the company. Bond was replaced by Leland Tollett, a former chairman and CEO of the company, and he said today that the outlook for its chicken business was "improving".
"While the first quarter of fiscal 2009 was clearly challenging, our chicken segment fundamentals are improving," Tollett said. "Product values are up, and our input costs are down. 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."
Tollett was also upbeat about the prospects for Tyson's other divisions. "We've experienced improvements in beef market conditions since December," he said. "Pork margins are expected to remain above normalised 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, bacon and lunch meat."
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