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Tyson Turns a Corner

by 5m Editor
8 February 2010, at 10:39a.m.

US - US meat and food processing giant, Tyson Foods, has seen all its operating segments show a profit in the first quarter of the current financial year.

Sales rose to $6.635 billion compared to $6.521 billion in the same quarter last year.

Operating income was $314 million compared to a loss of $198 million in 2009.

Income from Continuing Operations was $159 million compared to a loss of $110 million in the first quarter of 2009.

Chicken operating income was $78 million, or 3.2 per cent of sales. Beef operating income was $119 million, or 4.4 per cent of sales. Pork operating income was $62 million, or 7.6 per cent of sales and Prepared Foods operating income was $55 million, or 7.7 per cent of sales.

"With more than half a billion dollars in operating cash flow, we generated a record first quarter EPS of $0.42 and drove down net debt by $400 million," said Donnie Smith, Tyson's president and chief executive officer.

"Beef, Pork and Prepared Foods continued to execute well, and Chicken began to show the improvement we've been working toward for more than a year," Smith said.

"Our team members did a great job of staying focused and making progress week after week. We're developing momentum that I believe will continue through the year and into 2011."

He added that for Chicken: "We expect seasonal demand will improve as we get further into fiscal 2010, and we expect the pricing environment to improve aided by cold storage inventories and pullet placements which are down relative to the levels we have seen over the last several years. We also currently expect to see grain costs down as compared to fiscal 2009. Additionally, we will continue to focus on making operational improvements to help maximise our margins."

In the beef sector, he said: "While we expect a reduction in cattle supplies of approximately 1% in fiscal 2010, we do not expect a significant change in the fundamentals of our Beef business as it relates to the previous few quarters. We expect adequate supplies to operate our plants. We will manage our spreads by maximising our revenues through product mix and minimising our operating costs, while keeping our focus on quality and customer service."

Commenting on the Pork sector he said: "We expect to see a gradual decline in hog supplies through the first half of fiscal 2010, which will accelerate into the second half of fiscal 2010, resulting in industry slaughter slightly higher than 2007. However, we still believe we will have adequate supplies in the regions in which we operate. We will manage our spreads by continuing to control our costs and maximising our revenues."

About the Prepared Foods sector, he commented: "Raw material costs will likely increase in fiscal 2010, but we have made some changes in our sales contracts that move us further away from long-term fixed price contracts toward formula or shorter-term pricing, which will better enable us to absorb rising raw material costs. However, in the second quarter fiscal 2010, we will see a negative impact until some price increases take effect."