Tyson Foods Posts 2nd-Quarter Loss

Tyson Foods Inc. swung to a fiscal second-quarter loss, citing an "overabundance" of meat, but the meat and poultry processor was optimistic its market could strengthen in the current half.

The Springdale, Ark., company reported a net loss of $127 million, or 37 cents a share, for the quarter ended April 1, compared with net income of $76 million, or 21 cents a share, a year earlier. The latest results include a pretax charge of $59 million for the closure of four Midwestern plants.

Sales fell 1.7% to $6.25 billion from $6.36 billion.

While the company's poultry, pork and prepared-meats businesses were slightly profitable, Tyson's big beef business incurred a $188 million operating loss in the quarter.

Chief Executive John Tyson said the latest quarter was "extremely difficult -- we're glad to have it behind us."

The company said Brazil's announcement of a 15% reduction in chicken production could help to boost prices on the international market. Brazil is Tyson's biggest export competitor.

Tyson last month warned that its results were being hurt by the meat glut and that international concerns about avian flu had slashed consumption of chicken. On releasing its earnings, however, Tyson said reported outbreaks of bird flu abroad have slowed and that demand in Western Europe is improving.

Still, to help reduce inventories and improve operating margins, Tyson said it won't increase U.S. poultry production, as it normally does for summer promotions. At the same time, it intends to more heavily promote beef.

The company also said it has canceled or delayed some projects, which could reduce capital spending by as much as $90 million this fiscal year -- to perhaps $560 million from the previously forecast $600 million to $650 million.

Tyson yesterday closed several of its U.S. meat-production plants because of expected absenteeism among immigrant workers on a day of protests of congressional efforts to crack down on illegal immigration.

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