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Tyson Swings to a Loss

It's wider than analysts feared.
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Tyson Foods

(TSN) - Get Free Report

swung to a wider-than-expected third-quarter loss as its chicken and beef segments continued losing money.

Tyson lost $52 million, or 15 cents a share, in the quarter, including charges of 8 cents a share for a legal settlement and plant closings. Excluding the charge, analysts were forecasting a loss of 3 cents a share, according to Thomson First Call. Tyson earned $131 million, or 36 cents a share, a year ago.

Third-quarter sales rose 4.9% from a year ago to $6.38 billion, reflecting a 7% rise in chicken sales to $1.9 billion, a 6.3% rise in beef sales to $3 billion, and a 1.9% decline in pork sales to $754 million. Analysts were forecasting overall sales of $6.63 billion in the latest quarter.

"Our beef, pork and prepared foods segments' operating results improved $126 million over the second quarter, excluding plant closing charges of $59 million," Tyson said. "However, despite improvements, the third quarter remained challenging with losses in the chicken and beef segments. The oversupply of chicken and forward sales of leg quarters led to lower average sales prices in the third quarter as compared to the same quarter last year. In our beef segment, May and June were positive, but not enough to offset a very difficult April. In addition, our Canadian operations continue to struggle, compounded by the strong Canadian currency."

For the year ending in September, Tyson sees a loss of 41 cents to 51 cents a share. Analysts were epxecting a loss of 4 cents a share.

"According to poultry industry production data, supply and demand should be in better balance during the remainder of the fourth quarter, and we expect our chicken segment to post positive results. Although forward leg quarter sales adversely affected July, leg quarter pricing for August and September will be significantly better. As cattle supplies continue to increase year over year, we expect our beef segment to break even in the fourth quarter. We expect prepared foods earnings to improve and the pork segment should remain flat," Tyson said.