051144 Tyson 4Q Profits Miss Estimates

Springdale, AR - Tyson Foods Inc. reported its fiscal fourth-quarter profit rose by nearly 49 percent from results depressed by a charge last year. But the profit was below Wall Street estimates and it offered guidance for this year that was short of analysts' expectations. Its shares sank nearly 9 percent in morning trading.

Tyson earned $98 million, or 28 cents per share, for the three months ended Oct. 1 versus a year-earlier profit of $66 million, or 19 cents per share.

The latest quarter's results included a nonrecurring income tax net benefit of $15 million, and $8 million in pretax losses it sustained from Hurricane Katrina. The items added 3 cents per share to its profit, Tyson said.

A year ago, Tyson's quarterly per-share earnings were depressed by 8 cents a share as a result of charges for asset write-downs and impairments.

Sales fell 9 percent to $6.5 billion from $7.15 billion last year, mainly because of lower volume from one less week of sales this year, offset partially by increased sales prices and better product mix.

Wall Street had forecast earnings of 30 cents per share, the average estimate of 11 analysts surveyed by Thomson Financial, on sales of $7.03 billion.

The company's chicken sales fell 10 percent to $2.09 billion and pork sales declined 14 percent on lower volume, but operating profit in each segment grew 40 percent and 39 percent, respectively.

Tyson shares fell $1.66 to $16.84 in morning trading on the New York Stock Exchange, where they have traded in a 52-week range of $15.46 to $19.91.

For the year, Tyson earned $353 million, or 99 cents a share, versus $403 million, or $1.13 a share, a year ago. Annual revenue slipped to $26.01 billion from $26.44 billion a year ago.

"I think this has been the kind of year that shows you how important it is to have a sound strategy and stay focused on it," Tyson chairman and chief executive John Tyson said.

Tyson forecast fiscal 2006 earnings between 95 cents and $1.25 per share, versus analysts' consensus view of $1.33 per share. It also said it expects to record more costs from Hurricane Katrina in the first quarter.

Tyson said the first two quarters of 2006 will likely be difficult, with improvement in the final two quarters of the year.

"I believe we are making progress in the three primary elements of our strategy," Tyson said. He said the company wants to increase sales of value-added products to 50 percent of overall sales in the coming two to three years, adding $900 in sales in the category in 2006, to lift value-added sales to $12 billion.

Tyson, in a conference call with investors, said the company is working to improve operating efficiencies, includign spending on plant upgrades to bring about long-term savings. He also said the company want to increase its foreign presence.

Chief operating officer Greg Lee said avian influenza has still not been found in the United States and has not brought about a decrease in demand for Tyson poultry. Lee said U.S. housing and growing conditions are different from Asia and are more likely to protect animals from disease. When there is an illness outbreak, the industry addresses the problem quickly, he said. Also, U.S. consumers don't generally buy live poultry, vastly reducing the chance of human contact with the virus.

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