SPRINGDALE, Ark., April 19 /PRNewswire-FirstCall/ -- Tyson Foods (NYSE:
TSN) today reported preliminary second quarter 2006 results and
substantially reduced earnings guidance for fiscal 2006.
Volatile markets and the continued oversupply of all proteins
contributed to the significant deterioration of chicken and beef margins
during the second quarter of fiscal 2006 and resulted in a preliminary GAAP
loss of approximately $(0.38) per diluted share in the second quarter and a
preliminary GAAP loss of approximately $(0.27) per diluted share for the
first half of the fiscal year. The preliminary second quarter results
include an $0.08 per share charge for the recent closing of two Nebraska
beef plants and a $0.03 per share charge for the closing of two Iowa
processed meats facilities.
This oversupply across all proteins and a forecasted lack of price
recovery for the remainder of the fiscal year has prompted the company to
significantly reduce its fiscal 2006 GAAP earnings guidance to a range of
$(0.25) to $0.10 per diluted share. This estimate also includes the charges
relating to the plant closings in Nebraska and Iowa.
The discovery of H5N1 avian influenza in other parts of the world has
reduced U.S. chicken export prices more than expected. Unprecedented leg
quarter inventories have delayed the recovery of these export prices. It
has also put pressure on an overabundant, domestic white meat market, and
subsequently contributed to historically low breast meat prices.
Cattle supplies are gradually increasing and cattle prices are
declining, however, box beef prices are also declining, putting continued
pressure on beef margins. Key beef export markets have remained
inaccessible longer than anticipated. South Korea, which many expected to
reopen to U.S. beef in early spring, is still closed. The Japanese market
opened briefly then reinstituted a U.S. beef ban. It is uncertain when
either of these markets will reopen. Improvements in the beef segment are
still expected in the last half of fiscal 2006, but not at the level
previously forecasted.
Tyson's pork operations also continue to be challenged by the abundance
of competing proteins in the marketplace. Meanwhile, the company has also
been negatively affected by increased corn and diesel fuel expenses.
"While we expected tough and uncertain conditions in the protein
market, it has been far more difficult than we previously projected," said
John Tyson, Tyson chairman and CEO. "Protein supplies have remained more
burdensome than anticipated and will continue to put pressure on product
price recovery. We still expect an improved performance in the last half of
fiscal 2006; however it will not be of the magnitude originally projected.
Despite these challenging conditions, we remain confident in our business
strategy to create more value-added products, improve operational
efficiencies and expand our international presence."
Tyson plans to issue its final second quarter results as scheduled on
Monday, May 1. An earnings conference call is scheduled for 9:00 a.m.
Eastern.
Tyson Foods, Inc., founded in 1935 with headquarters in Springdale,
Arkansas, is the world's largest processor and marketer of chicken, beef,
and pork, the second-largest food company in the Fortune 500 and a member
of the S&P 500. The company produces a wide variety of protein-based and
prepared food products, which are marketed under the "Powered by Tyson(TM)"
strategy. Tyson is the recognized market leader in the retail and
foodservice markets it serves, providing products and service to customers
throughout the United States and more than 80 countries. The company has
approximately 114,000 Team Members employed at more than 300 facilities and
offices in the United States and around the world. Through its Core Values,
Code of Conduct and Team Member Bill of Rights, Tyson strives to operate
with integrity and trust and is committed to creating value for its
shareholders, customers and Team Members. The company also strives to be
faith-friendly, provide a safe work environment and serve as stewards of
the animals, land and environment entrusted to it.
Forward-Looking Statements
The Company and its representatives may from time to time make written
or oral forward-looking statements, such as statements relating to current
and future earnings. These forward-looking statements are subject to a
number of factors and uncertainties which could cause the Company's actual
results and experiences to differ materially from the anticipated results
and expectations, expressed in such forward-looking statements. The Company
wishes to caution readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made. Among the
factors that may cause actual results and experiences to differ from the
anticipated results and expectations expressed in such forward-looking
statements are the following: (i) fluctuations in the cost and availability
of raw materials, such as live cattle, live swine or feed grains; (ii)
market conditions for finished products, including the supply and pricing
of alternative proteins, and the demand for alternative proteins; (iii)
risks associated with effectively evaluating derivatives and hedging
activities; (iv) access to foreign markets together with foreign economic
conditions, including currency fluctuations and import/export restrictions;
(v) outbreak of a livestock disease (such as avian influenza (AI) or bovine
spongiform encephalopathy (BSE)) which could have an effect on livestock
owned by the Company, the availability of livestock for purchase by the
Company, or the Company's ability to access certain markets; (vi)
successful rationalization of existing facilities, and the operating
efficiencies of the facilities; (vii) changes in the availability and
relative costs of labor and contract growers; (viii) issues related to food
safety, including costs resulting from product recalls, regulatory
compliance and any related claims or litigation; (ix) adverse results from
litigation; (x) risks associated with leverage, including cost increases
due to rising interest rates or changes in debt ratings or outlook; (xi)
changes in regulations and laws (both domestic and foreign), including
changes in accounting standards, environmental laws and occupational,
health and safety laws; (xii) the ability of the Company to make effective
acquisitions, and successfully integrate newly acquired businesses into
existing operations; (xiii) effectiveness of advertising and marketing
programs; and (xiv) the effect of, or changes in, general economic
conditions.
SOURCE Tyson Foods, Inc.
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Related links:
http://www.tyson.com
CONTACT:
media, Gary Mickelson, +1-479-290-6111, or
investors, Ruth Ann Wisener, +1-479-290-4235, both of Tyson
Foods, Inc.
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