Tyson Profits Fall on Feed Costs
Operating income for the third quarter of fiscal 2008 was $45 million compared to $212 million, and net income was $9 million compared to $111 million, for the same period last year.
29/07/08 Tyson Foods, Inc., has reported diluted earnings per share of $0.03 for the fiscal quarter ended June 28, 2008, compared to $0.31 diluted earnings per share in the same quarter last year. Third quarter 2008 sales were $6.8 billion compared to $6.6 billion for the same period last year. Operating income for the third quarter of fiscal 2008 was $45 million compared to $212 million, and net income was $9 million compared to $111 million, for the same period last year. In the third quarter of fiscal 2008, operating income included $13 million of charges, or $0.02 per share after tax, related to asset impairments and excluded $18 million of pretax income related to our discontinued Lakeside operation. Results of our continuing operations were a loss of $0.01 and earnings of $0.32 in the third quarter of fiscal years 2008 and 2007, respectively. Results of our discontinued operations were earnings of $0.04 and a loss of $0.01 in the third quarter of fiscal years 2008 and 2007, respectively.
Diluted earnings per share for the nine months of fiscal 2008 were $0.11 compared to $0.66 in the same period last year. Sales for the nine months of fiscal 2008 were $19.7 billion compared to $19.2 billion for the same period last year. Operating income for the nine months of fiscal 2008 was $193 million compared to $511 million, and net income was $38 million compared to $236 million, for the same period last year. In the nine months of fiscal 2008, we recorded an $18 million non-operating gain on the sale of an investment, and $66 million of charges related to plant closings, asset impairments and severance. Results of our continuing operations were earnings of $0.12 and $0.66 in the nine months of fiscal years 2008 and 2007, respectively. Results of our discontinued operations were a loss of $0.01 and $0.00 in the nine months of fiscal years 2008 and 2007, respectively.
On June 25, 2008, the company entered into a letter of intent with XL Foods Inc. to sell the beef processing, cattle feedyard and fertilizer assets of Lakeside Farm Industries Ltd in Alberta, Canada. The transaction remains subject to government approvals, the receipt of commercially reasonable financing by XL Foods and the execution of a definitive agreement between Tyson and XL Foods. We hope to complete the sale by the end of fiscal 2008. The results for Lakeside, current and prior periods, are reported as discontinued operations.
"In the third quarter of fiscal 2008, Tyson Foods' diversified business offset the losses incurred by our Chicken segment, which is experiencing more difficult market dynamics," said Richard L. Bond, president and chief executive officer. "Our Beef, Pork and Prepared Foods segments were profitable, while our Chicken segment suffered a loss.
"Beef performed better than expected, although results were masked by a negative $75 million impact from application of mark-to-market accounting treatment related to our unrealized derivative losses for forward cattle purchases and forward boxed beef sales," Bond said. "Although we will profit from this risk management activity over the coming months, it disguises an otherwise solid performance in our beef operations this quarter.
"For the third consecutive quarter, our Pork segment achieved a margin above the normalized range. Sales were up for the quarter as well. Prepared Foods sales and volume were up slightly over the same quarter last year; however, operating income was down significantly due to increased raw material costs, including wheat, dairy and cooking ingredients in addition to charges related to flood damage at our plant in Jefferson, Wisconsin," Bond said.
"The Chicken segment remains under pressure from higher input costs, although we have been able to offset some losses through pricing and risk management activities. Grain costs were up an additional $140 million compared to the third quarter of 2007 and are expected to increase approximately $550 million for fiscal 2008. There has been a tremendous effort by our poultry operations, sales and marketing teams to improve efficiencies and develop products to meet our customers' needs in this economy. I am confident our chicken business will be well positioned when the economics improve," Bond said.
