Meat products producer Tyson Foods Inc. (TSN) on Monday posted a loss for the fourth quarter reflecting a non-cash goodwill impairment charge in its Beef segment. However, sales rose from last year and surpassed the Street view. Further, the company expects its segments to report solid performances for fiscal 2010.
The Springdale, Arkansas-based company's fourth-quarter net loss was $455 million or $1.22 per share, compared to a profit of $48 million or $0.13 per share in the year-ago quarter.
The latest quarter results encompassed a non-cash goodwill impairment charge in its Beef segment of $560 million or $1.50 per share. Excluding the goodwill impairment charge, 2009 fourth-quarter net income was $0.28 per share.
On average, 12 analysts polled by Thomson Reuters expected the company to post earnings of $0.26 per share. Analysts' estimates typically exclude special items.
Quarterly sales amounted to $7.21 billion, higher than the previous year's sales of $7.20 billion, and surpassed the $6.88 billion revenue consensus estimate of nine analysts polled by Thomson Reuters.
Segment wise, the company's Chicken products generated fourth-quarter sales of $2.65 billion, an increase from $2.38 billion reported a year ago. Segment operating income was $32 million, compared to a loss of $91 million incurred in the same quarter of last year, positively impacted by operational improvements, which included: yield, mix and live production performance improvements; additional processing flexibility; and reduced interplant product movement. Volumes increased 10.4%, and average price change was 0.6% higher.
Sales from the Beef products declined to $2.97 billion from $3.10 billion in the corresponding quarter of the previous year. The segment recorded an operating loss of $440 million, compared to a profit of $159 million in the prior-year quarter. Volumes grew 14.0%, while average price change was 16.0% lower.
Pork sales decreased to $865 million from $1.00 billion in the fourth quarter of fiscal 2008. Operating income dropped to $48 million from $75 million in the year-earlier quarter. Volumes increased 13.4%, while average price change decreased 23.8%.
Prepared food sales totaled $733 million, higher than the $717 million sales reported in the same quarter of last year. Operating income for the segment was $39 million, compared to a loss of $5 million in the three months ended September 27, 2008. Volumes advanced 11.7%, while average price change was 8.4% lower.
Donnie Smith, Tyson's new president and chief executive officer, said, "All operating segments were profitable in the fourth quarter, with Beef, Pork and Prepared Foods within or above historical operating margin ranges, excluding the goodwill impairment. These three segments are operating very well, and measures are in place for more improvement in our Chicken segment. The team knows what to do, and now it's a matter of execution."
For the fiscal year 2009, the company reported a net loss of $537 million or $1.44 per share, compared to a profit of $86 million or $0.24 per share in the prior-year period.
Excluding the goodwill impairment charge, fiscal 2009 net income was $0.06 per share. Analysts expected earnings of $0.25 per share for the fiscal year 2009.
Sales for the twelve months ended 2009 dropped to $26.7 billion from $26.9 billion reported in the previous year. Eleven Wall Street analysts had a consensus revenue estimate of $26.35 billion for fiscal 2009.
Looking ahead, the company expects demand for its chicken products to improve in fiscal 2010, and projects the pricing environment to improve aided by cold storage inventories which are down relative to the levels over the last several years. The company also expects to see grain costs down as compared to fiscal 2009.
Further, Tyson Foods noted that it estimates a reduction in cattle supplies of 1-2% in fiscal 2010, and expects 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, the company said it would manage its spreads by continuing to control costs and maximizing revenues.
At its Prepared Foods segment, raw material costs will likely increase in fiscal 2010, and further the company expects strong results in fiscal 2010, reflecting the changes made with the company's sales contracts and the operational efficiencies.
Jim Lochner, Tyson's new chief operating officer, said, "Fiscal 2010 should be a much better year." Lochner added, "We think Beef, Pork and Prepared Foods will continue with a solid performance, and we expect the steps we've taken to improve Chicken will manifest themselves. Also, USDA data point to lower overall protein supplies, and there is potential for good demand improvement as the global economy recovers."
Among other players in the field, Hormel Foods Corp. (HRL) is slated to report its fourth-quarter results on November 24, with analysts forecasting earnings of $0.68 per share on revenues of $1.82 billion. The company expects fiscal 2009 earnings in a range of $2.36 - $2.42 per share.
Tyson Foods shares, which have been trading between $4.50 and $14.25 in the past 52 weeks, closed Friday's regular trading session at $13.07. In the pre-market session, the stock is currently trading at $12.89, down 18 cents or 1.38%.
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