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Tyson announces 3rd quarter earnings decline

Published on 1 August, 2006, Last updated at 00:23 GMT

1st Aug, 2006: TEMPERANCEVILLE, USA - Tyson Foods Inc. on Monday announced third quarter setbacks compared to the period last year, including a $79 million drop in overall net income and a chicken segment operating loss of $59 million, although officials say the world's largest poultry processor is rebounding by the quarter and that jobs at the company's processing plant on Virginia's Eastern Shore and feed mill in Snow Hill, at least for now, are safe.

Tyson President and Chief Executive Officer Dick Bond did say in an earnings conference call Monday with financial analysts that Tyson would cut chicken production between 2 percent and 3 percent by fall, and that the reduction reflected an industry move.

"We have seen virtually all of our major competition have publicly announced similar cuts, most of which just are starting to take place late June and into July," he stated.

Gary Michelson, Tyson spokesman, said late Monday that between 18 percent and 20 percent of a $200 million cost reduction program announced July 13 did not target any of the estimated 1,200 employees at the poultry processing plant and hatchery in Temperanceville or the 37 workers at a Tyson feed mill in Snow Hill.

Rather, the strategy to return the Springdale, Ark.-based poultry giant to profitability meant reductions in staffing, recruiting, sales expenses, corporate travel and marketing incentives, he said.

"There were cuts in a variety of areas but not (on the Eastern Shore)," he said.

Corporate officials blamed some losses on a "struggling" pork operation and "deteriorated" beef sales.

International demand for chicken also has been on the decline, as the entire industry works to hold on to a market nervous about the threat of avian influenza.

The brand-specific marketing campaign, "Powered by Tyson," and generic poultry advertising as the "Eat Chicken Tonight!" launched in the spring by the Delmarva Poultry Industry Inc., are tools to maintain consumer favor, Michelson said.


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