040154 Tyson Reports Higher Profit for 1QJanuary 31, 2004Little Rock, AR - Tyson Foods Inc. said its earnings rose 46 percent for its first fiscal quarter as operating profits surged in its chicken and pork businesses and beef revenues rose despite worries about mad cow disease. The company earned $57 million, or 16 cents a share, for the three months ended Dec. 27 versus a profit of $39 million, or 11 cents a share, a year ago. Sales rose to $6.5 billion compared to $5.8 billion in its first quarter last year. The earnings results were depressed by pretax charges of 16 cents a share. Analysts surveyed by Thomson First Call had forecast earnings of 26 cents per share before charges. Overall operating earnings rose to $161 million from $145 million a year ago. In trading on the New York Stock Exchange (news - web sites), Tyson shares rose $1.49, or 11 percent, to close at $14.99. Tyson said it took a pretax charge of $61 million, or 11 cents per share, due to costs associated with the response to the discovery of the first U.S. case of mad cow disease last month. Tyson and other meat companies were hurt when numerous nations halted imports of U.S. beef. Company officials said in a conference call the $61 million charge was an estimate and that there's a chance future mad cow-related costs could be as high as $30 million, though it could see no further charges. Chief operating officer Greg Lee said markets in Japan and Korea could reopen within three to six months and Mexico could reopen within six to eight weeks. Also, Tyson had pretax costs of $25 million, 5 cents per share, related to closings of poultry plants and prepared foods plants. In 2003, the company had charges of $47 million, 9 cents per share, for closing poultry operations in the first quarter, partially offset by $28 million, or 5 cents per share, from vitamin antitrust litigation. Tyson chairman and chief executive John Tyson acknowledged the impact of mad cow worries to the company's bottom line but said the Springdale-based firm's outlook remains bright. "We were adversely affected by the discovery of a cow with BSE (bovine spongiform encephalopathy), but our people managed the situation very well. Domestic demand for beef remains strong and we are optimistic about the prospects for our overall business this year," Tyson said. Beef sales for the period rose by 15.5 percent, largely due to a 31.5 percent rise in prices as volume dropped by 12.2 percent. The division had an operating loss of $29 million in contrast to a profit of $47 million a year earlier. Chicken sales rose 6.4 percent from a year ago, and operating profits in that division rose to $116 million from $13 million. Pork sales increased 24.1 percent and profits more than doubled to $49 million from $24 million a year ago. The company said the outbreak in Asia of an influenza virus among poultry could have a positive impact on Tyson, which could see increased exports. Company officials said controls in the United States make a domestic outbreak of the virus extremely unlikely. The company paid $114 million toward its debt in the quarter, leaving $3.5 billion. The company has a debt-to-capital ratio of 46.5 percent, and John Tyson said the company will look toward further growth. In a conference call with investors Monday morning, John Tyson said U.S. consumers didn't change their eating habits and continued to look for the best values among beef, chicken and pork. The company noted that it expects a resolution as soon as this week to a strike at its plant in Jefferson, Wis., where its 470 workers began pickets 11 months ago. The president of the union local has recommended members accept an amended contract offer. The plant has been kept running with replacement workers. The strikers are to vote Thursday. The company reiterated earlier guidance that it expects fiscal 2004 diluted earnings per share in the range of 90 cents to $1.20. The consensus forecast of analysts was for earnings of $1.04 for the year. Company officials said Tyson would continue its practice of not issuing quarterly guidance. Tyson has 300 plants among 26 states and 22 nations and has 120,000 employees.
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