Tyson Foods reports $112 million quarterly loss
by January 26, 2009 7:37 am 122 views
Springdale-based Tyson Foods Inc. reported Monday (Jan. 26) a net income loss of $112 million in its first fiscal quarter of 2009 (for the 90-period ended Dec. 27). Sales in the first quarter were $6.52 billion, up just 0.7% over the same period of 2008.
The negative quarter continues a decline in earnings that saw the company’s net income for fiscal year 2008 ($86 million) decline 67.9% compared to fiscal 2007.
Leland Tollett, the new (and former) president and CEO of Tyson Foods, attempted to sound optimistic about the dismal earnings report.
“While the first quarter of fiscal 2009 was clearly challenging, our chicken segment fundamentals are improving. Product values are up, and our input costs are down,” Tollett said in a statement released by the company. “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, a former chairman and CEO of Tyson Foods and close associate of majority Tyson shareholder Don Tyson, replaced Dick Bond Jan. 5 as president and CEO of Tyson Foods.
Tyson Foods, the world’s largest meat processing company, and other companies in the sector face falling price pressures related to oversupply in the market, high feed and fuel costs, a global recession that is cutting demand for higher-margin products and a credit squeeze that increases the cost of capital.
Pittsburg, Texas-based Pilgrim’s Pride, the nation’s largest pure poultry processing company, was forced into bankruptcy reorganization late in 2008 as a result of the tough market conditions.
SEGMENT PERFORMANCE
And poultry was the problem for Tyson Foods in the first quarter, with the chicken segment losing $286 million. The segment gained $48 million in the first quarter of 2007.
According to the Tyson Foods earnings report: “Operating results (in the chicken segment) were adversely impacted by an increase in grain costs of $183 million and net losses of $197 million from our commodity risk management activities (hedging) related to grain purchases, as compared to the same period of fiscal 2008.”
The beef segment posted no income, according to the Tyson Foods report. The segment posted a $68 million loss in the first quarter of 2007.
Pork continues to perform well for the company, with the segment posting $55 million in operating income in the quarter. However, that was down from a $79 million gain in the 2007 quarter.
The company’s prepared foods segment, which has not gained the sales traction the company had once hoped, did post operating income of $35 million in the quarter, level with the performance of the 2007 quarter.
CASH, DEBT POSITIONS
Tyson Foods saw an $84 million decline in its cash and cash equivalents position in the quarter. While the company has credit lines from which to operate, its cash position at the end of the quarter was $166 million.
Also, the company’s long-term debt grew in the quarter from $2.88 billion in the same quarter of 2007 to $2.99 billion in the 2008 quarter. Its interest expense in the quarter was $63 million, up from $53 million in the 2007 quarter.