Tyson's 4Q Earnings Tumble 55%

Monday, November 15th 2004, 11:05 am

By: News On 6

SPRINGDALE, Ark. (AP) _ Tyson Foods Inc., the world's largest meat company, announced Monday that its fourth-quarter earnings dropped 55 percent from a year earlier but still beat Wall Street estimates. Its shares rose more than 3 percent in early trading.

Its sales and profits grew for the full year, despite pressures from grain costs, mad cow disease and bird flu.

Tyson earned $66 million, or 19 cents a share, for the period ending Oct. 2, compared to $147 million, or 42 cents a share, for the same three months a year ago. Thomson First Call had forecast earnings of 17 cents per share.

Sales for the quarter rose to $7.1 billion, versus $6.6 billion a year ago led by increases in chicken and pork sales while beef sales fell.

For the full year, the company earned $403 million, or $1.13 per share, compared to $337 million, or 96 cents a year ago. Sales were up 8 percent on the year to $26.4 billion versus $24.5 billion a year earlier.

Tyson said it expects its 2005 earnings to be between $1.15 to $1.45 per share.

``Our management team has demonstrated their ability to handle the challenges of our business, and we will demonstrate that again in 2005,'' Tyson Foods chairman and chief executive John Tyson said.

He noted that the company has maintained its balance sheet in a manner that reduced its debt-to-capital ratio from 48 percent in 2003 to 44 percent in 2004. The company took on a vast amount of debt with its 2001 purchase of South Dakota-based meatpacker IBP Inc. for $4.7 billion. Tyson said his goal is for the debt ratio to drop to 40 percent in 2005.

The company is also working to build its mix of value-added products so that the higher-margin lines represent a greater proportion of sales.

Chicken sales were up 12.7 percent to $2.32 billion, and sale prices were up 6.7 percent for the latest quarter. The company said its chicken segment growth was slowed by a drop in international sales that came after avian influenza was found in the United States, though not at any Tyson farms.

Pork sales for the quarter grew to $899 million from $648 million a year earlier, representing an 11.7 percent increase in volume and 22.9 percent jump in sales price.

Beef sales in the fourth quarter declined 4.4 percent to $3.148 billion from $3.283 billion, with the average sale price up 0.3 percent.

Prepared foods were up 3.5 percent in volume in the fourth quarter in, with sales of $787 million.

Increased grain prices resulted in Tyson spending $106 million more in the quarter than in the prior year, and the company lost $20 million in its commodity risk management plan.