Tulsa World: Tyson Foods posts loss on beef charge

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Tyson Foods posts loss on beef charge

A Tyson Foods truck sits at a warehouse loading dock in Little Rock. Tyson Foods Inc., the world's largest meat producer, said Monday it lost money in its fiscal fourth quarter, primarily because of a hefty goodwill impairment charge. Danny Johnston / Associated Press

By EMILY FREDRIX Associated Press
Published: 11/24/2009 2:23 AM
Last Modified: 11/24/2009 8:34 AM

Tyson Foods Inc. said it made strides in the meat business this year and predicts more improvements next year, but analysts worry the company's all-important chicken business is lagging others in the industry.

The world's largest meat producer, based in Springdale, Ark., said on Monday a hefty impairment charge in its beef business left it with a loss for the fourth quarter. But all of its business units, including chicken and pork, were profitable, when excluding the $560 million noncash charge.

The company said it expects those profits to continue as an improving economy will lead to better demand next year. Consumers have been watching their money tightly in the recession, eating less expensive food and limiting trips out to restaurants. That has hurt Tyson's business by pulling down prices for key items like chicken breast meat.

The company did not issue guidance for 2010, other than saying it expected to see more progress. There are still issues, such as feed costs rising again — though not as high as records from summer 2008 — and fluctuating foreign currencies.

"We have our beef, pork and prepared business where they should be, and we're on our way to getting our chicken business there, too," Donnie Smith, who was promoted to chief executive officer last week, told analysts on a conference call Monday.

The company's chicken business was hurt the most in the downturn, and last January it tapped former CEO Leland Tollett to restore the segment to growth. He was replaced last week by Smith, Tyson's senior group vice president of poultry and prepared foods, a sign that the company thinks its chicken business has improved.

But according to the latest numbers, the chicken business is performing worse than those of Tyson's peers, said KeyBanc Capital Markets analyst Akshay Jagdale.

Other companies in the industry — including Pilgrim's Pride Corp, which filed for bankruptcy protection amid the downturn — have cut production, which bolsters prices and helps ensure profits.

But Tyson only shed inventory and made no mention of chicken production cuts next year, Jagdale said. By EMILY FREDRIX Associated Press

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