A US$91 million operating loss in Tyson Foods’ chicken business caused the U. S. meat giant to miss Wall Street earnings estimates on Nov. 10, sending shares down nine per cent.
High feed costs and low meat prices should continue to hurt Tyson’s chicken unit, its second largest behind beef. In a conference call, Tyson’s CEO said the chicken business could lose money in the current quarter and possibly the following quarter.
Shares of Tyson and other meat companies have fallen recently as investors worry about meat companies’ ability to pay bills amid talk of slowing meat exports and tight credit.
“Given the combination of challenges currently facing the protein industry, management’s outlook in the press release was more bearish in tone, making no reference to potential favourable offsets from supply-side cutbacks,” Barclays Capital analyst Christopher Bledsoe said in a research note.
Tyson’s net profit for its fiscal fourth quarter ended Sept. 27 rose to $48 million, compared with $32 million a year earlier (all figures US$). Sales for the period were $7.2 billion, up 9.6 per cent from a year earlier.
The chicken unit, the nation’s second-largest behind Pilgrim’s Pride Corp., had an operating loss of $91 million, compared with a year-earlier profit of $63 million.
Tyson said it had $230 million of additional grain costs during the quarter versus a year earlier.