Investors seemed buoyed mostly by confident statements about expectations for the chicken business and for profitability for the company overall.

"I'm optimistic that with declining inputs and the momentum, we anticipate returning to profitability in the next two quarters," interim President and CEO Leland Tollett told research analysts on the call.

By the numbers

Tyson Foods Inc. on Monday reported a net loss of $112 million, or 30 cents per share, on total sales of $6.5 billion. By contrast, for the same period a year earlier, Tyson posted net earnings of $34 million on $6.47 billion.

Drops in volume during the quarter for the beef segment held that unit to breakeven for the quarter on an operating basis, while margins for pork and prepared foods dropped, but remain in the black.

The chicken segment, however, posted an operating loss of $286 million for the quarter on segment sales of $2.2 billion. In a news release, the company said that chicken losses reflect year-over-year increases in grain costs of $183 million, and wider net losses of $197 million from commodity risk management activities related to grain purchases, as compared to the same period the year earlier.

Sense of urgency

"We have a renewed sense of urgency to return the chicken business to profitability and regain our position as best in class," Tollett said. "We are focusing on selling the whole bird rather than [selling the tenders and the wings and] expect the export market to [pick up the rest]."

Although Tyson cut chicken production by 5 percent in December and the reduced level of production is likely to continue for some time, Donnie Smith, senior group vice president of Poultry and Prepared Foods, said that overall profitability for the segment is expected to remain in the 5 percent-to-7 percent range.

"When our demand and our supply got out of balance in December we made the necessary adjustments," he said, but "we will … create a lot more shareholder value with fundamentals than we ever will with production cuts."

Other business

Tollett also touted the progress in the company's investment in the Dynamic Fuels renewable synthetic fuels facility in Louisiana, a joint venture between Tyson Foods and Syntroleum Corp. The plant is on budget and on schedule, and should be ready to start up in January 2010, with normalized earnings contributions realized by June 2010. The company is betting that using Dynamic Fuels' synthetic product will help make up the difference between the amount the company now spends on diesel fuel, and the value of the livestock that its trucks are transporting.

"We're looking forward, not backward. I'm comfortable and optimistic," about the company's position in the market now and in the future, Tollett said.

Finally, Tollett addressed the question of how long he expects to be in his interim position, since he stepped in only after former CEO Dick Bond unexpectedly announced he was stepping down from the job earlier this month.

"I'm confident we can find the right person [to be CEO] within the talent pool at Tyson. I will be here long enough to turn the chicken business around and for the board to find a CEO," he said. "Frankly, I wasn't all that tired of being retired."

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