Tyson Foods posts third quarter income gain; negative for the year

Tyson Foods Inc. posted an impressive third fiscal quarter with net income of $134 million, but for the first nine months months of the fiscal year the company is recording a net income loss of $82 million.

The Springdale-based global meat processing and distribution company reported early Monday (Aug. 3) that its third fiscal quarter earnings were $134 million, up significantly over the $9 million in the same quarter of 2008. Total sales for the third quarter were $6.66 billion, down 2.7% from sales in the same quarter of 2008. The company’s per share earnings of 35 cents for the quarter beat the average estimate from analysts of 22 cents.

“Our earnings for the third quarter reflect a solid performance by all of our operating segments,” Leland Tollett, interim president and chief executive officer of Tyson Foods, said in the earnings statement.

For the first nine fiscal months the company has posted a loss of $82 million, compared to a $38 million net income for the same period of the previous year. The chicken segment has posted an operational income loss of $189 million for the first nine months of the year. The company’s hedging of food and fuel prices is the primary culprit in the loss.

“Operating results were adversely impacted in the third quarter and nine months of fiscal 2009, as compared to the same periods of fiscal 2008, by a decline of $68 million and $389 million, respectively, from our commodity risk management activities related to grain and energy purchases,” the company noted in its earnings statement.

Tollett said more work is required to improve “operational efficiencies” in the chicken segment, and predicted that “soft demand” for protein will “make the fourth quarter more challenging than the third quarter.”

Numbers by segment (Nine months of fiscal year)
• Chicken
Sales
2009: $7.01 billion
2008: $6.51 billion

Operating income
2009: -$189 million
2008: -$27 million

• Beef
Sales
2009: $7.81 billion
2008: $8.56 billion

Operating income
2009: $94 million
2008: -$53 million

• Pork
Sales
2009: $2.56 billion
2008: $2.58 billion

Operating income
2009: $112 million
2008: $205 million

Tyson Foods employs approximately 107,000 at more than 300 facilities around the world.