Poor poultry profits hit Tyson

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Related tags: Cent, Tyson foods, Poultry

Plant closures, higher grain costs and the ongoing rationalisation of its business interests have resulted in a decline in quarterly earnings of 26 per cent for Tyson Foods.

Plant closures, higher grain costs and the ongoing rationalisation of its business interests have resulted in a decline in quarterly earnings of 26 per cent for Tyson Foods. The company, which is the largest meat processor in the US, also saw its operating income drop from $247 million in last year's third quarter to $201 million in this year's third quarter, a drop of nearly 19 per cent.

The poor figures can largely be attributed to weak chicken profits. Although third quarter sales increased $19 million or 1 per cent from the same period past year, chicken segment operating income decreased $58 million.

International sales also continued to be affected by import restrictions and political pressures, primarily in Asia. The company points to the ongoing rationalisation of its assets, including the recent closure of the firm's Maryland poultry plant, as a major factor behind the figures.

The firm's prepared foods segment third quarter sales decreased $108 million or 14.1 per cent from the same period last year, with a 4.8 per cent decrease in average sales prices and a 9.8 per cent decrease in volume. Tyson claims that product and plant rationalisation explain the poor figures. A strike at the company's Jefferson, Wisconsin plant also did not help matters.

Nonetheless, Tyson​ remains confident that rising chicken prices and the rolling out of existing contracts will allow the company to improve its financial situation in the coming months. Indeed group chairman John Tyson was keen to put a positive spin on things, pointing out that sales for the third quarter of 2003 were up 6 per cent to $6.3 billion compared to the same period last year.

"We are generally pleased with the progress made over the past two years towards our initial strategic goals,"​ he said. "We are succeeding in moving our products up the value chain, as well as in our brand building efforts. From a financial perspective, we are on track to achieve or exceed our debt to capital goal of 50 per cent or below by the end of fiscal 2003.Our corporate strategy is designed to achieve industry leadership in all segments of our business and we believe there is room for improvement."

In contrast to the firm's poultry and prepared foods segment, record beef prices and the ongoing ban on imports into the US of Canadian beef helped Tyson to record an increase in operating profit within the sector. Beef segment third quarter sales increased 16.4 per cent from the same period last year, with a 17.8 per cent increase in average sales prices despite a 1 per cent decrease in volume.

The restructuring of the group's swine business last year has also so far proved a success, with the company reporting strong results within the pork segment. Third quarter sales increased $79 million or 14.4 per cent from the same period last year, with a 23.6 per cent increase in average sales prices. The company believes that once other sectors of the business are fully reorganised, better results across the board will follow.

Related topics: Meat

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