Tyson Foods Cuts Outlook For 2007 Earnings
Tyson Foods, the largest U.S. meat company, cut its 2007 earnings outlook primarily due to higher-than-expected live cattle costs and a decline in beef revenue resulting from a disruption in South Korean beef trade.
The company also lost some sales volume in chicken when it raised prices to earlier this year, Tyson said in remarks prepared for an investor conference.
Tyson shares fell 9 percent before the opening bell.
The Springdale, Arkansas-based company expects fiscal year 2007 earnings of 72 cents to 80 cents a share, compared with its prior view of 82 cents to 92 cents a share. The company is currently in the last month of fiscal 2007.
Analysts expect the company to earn 90 cents a share, according to Reuters Estimates.
South Korea suspended trade with plants owned by Tyson and Cargill Inc in June when some beef meant for U.S. consumption was wrongly shipped to the Asian country, but said later that month it was allowing beef trade to resume.
Tyson also said it has had about $300 million in additional costs for grain, which is used in animal feed, this year. Like many food companies, Tyson has raised prices to try to pass on some of those costs.
The company has also cut costs, closing two prepared foods plants and three beef plants and selling two poultry plants, while it also said it "rationalized" three beef plants to improve capacity utilization.
The company Wednesday said it has embarked on a new program that is expected to further streamline its business and may lead to the reduction of some layers of management. The evaluation process under this program is expected to continue through mid-October, Tyson said.
Tyson shares traded at $20 before the opening bell, down from Tuesday's New York Stock exchange close of $22.01.