* Tyson will "most likely" lose money in Q1
* "Significant losses" seen in chicken in Q1
* Tyson Q4 earnings up 50 percent on strong beef, pork
* Shares tumble 10 percent on outlook
(Adds details in second paragraph, adds closing share price)
By Bob Burgdorfer
CHICAGO, Nov 10 A $91 million operating loss in
Tyson Foods Inc's (TSN.N) chicken business plus a forecast that
the company will "most likely" post a loss for the current
quarter sent shares of the U.S. meat giant lower on Monday.
The company reported a smaller-than-expected fourth-quarter
profit on Monday, hurt by the chicken results while beef and
pork were profitable.
"It will be a negative quarter in chicken and most likely a
negative quarter overall for our results," Tyson Chief Executive
Richard Bond said of the current quarter, which ends in
Wall Street analysts on average had expected a $41.7 million
profit for the fiscal first quarter, according to Reuters
Tyson and other chicken producers have been hurt this year
by higher feed costs and the inability to raise chicken prices
fast enough to offset those costs.
"Given where leg quarter prices are and breast meat prices
are, we are going to lose some significant dollars in Q1," Bond
told analysts on a conference call.
MORE CHICKEN REDUCTIONS NEEDED
Tyson would not say if it will cut chicken production from
current levels, as other producers have done, but said more
reductions by the industry may be needed to bring supplies in
line with demand.
Tyson's net profit for its fiscal fourth quarter ended Sept.
27 rose to $48 million, or 13 cents per share, compared with $32
million, or 9 cents, a year earlier.
The results included one-time charges totaling $10 million,
or 2 cents per share, for asset impairment.
Minus those charges, earnings would have been 15 cents a
share. On that basis Wall Street analysts expected a profit of
19 cents per share, according to Reuters Estimates.
Sales for the period were $7.2 billion, up 9.6 percent from
the $6.57 billion a year earlier.
The loss on chicken and the outlook for further losses have
raised worries that Tyson may have trouble meeting its debt
obligations, similar to what competitor Pilgrim's Pride Corp
PPC.N faced, said Ann Gilpin, analyst at Morningstar.
Pilgrim's Pride, the largest U.S. chicken producer, recently
needed two waivers in order not to violate credit covenants on
"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 favorable
offsets from supply-side cutbacks," Barclays Capital analyst
Christopher Bledsoe said in a research note.
CHICKEN LOSES, BEEF AND PORK GAIN
The chicken unit, the nation's second-largest behind
Pilgrim's Pride, 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.
Operating profits for beef and pork were $159 million and
$75 million, respectively, compared with year-ago results of $5
million and $27 million. Higher beef and pork prices, benefits
from hedging activities, and exports helped those businesses.
Prepared-foods lost $5 million, versus a year-earlier profit
of $7 million, hurt by higher raw material costs.
The company said on the conference call it expected
fiscal-year 2009 revenue of $28 billion to $29 billion compared
with 2008 revenue of $26.86 billion.
Tyson's shares ended down 77 cents or 10.3 percent at $6.69
on the New York Stock Exchange on Monday, off an earlier low at
(Reporting by Bob Burgdorfer, editing by Matthew Lewis)