PREVIEW-Tyson Foods, Pilgrim’s Pride weak link may be chicken

* What: Tyson Foods, Pilgrim’s Pride results

* When: Pilgrim’s Pride reports on Feb. 4, Tyson on Feb. 5

* Beef and pork seen driving Tyson profits

* Weak chicken results likely

* Pilgrim’s Pride reporting first time since bankruptcy

By Bob Burgdorfer

CHICAGO, Feb 3 (BestGrowthStock) – U.S. meat company Tyson Foods
Inc (TSN.N: ) and chicken producer Pilgrim’s Pride Corp (PPC.N: )
will report quarterly results this week and analysts are
expecting chicken results from both to be their weak link.

Tyson is the nation’s largest meat company and should
report a profit on Friday, compared with a year-ago loss. The
company produces beef, pork, and chicken, and analysts said the
beef and pork should be the profit drivers.

On average, Tyson is forecast to report a profit of 18
cents per share, according Thomson Reuters I/B/E/S. A year-ago
it had a loss of 30 cents a share, which was largely due to its
chicken unit.

Pilgrim’s Pride will report quarterly results on Thursday,
which will be its first quarterly results since exiting Chapter
11 bankruptcy in December.

As part of its bankruptcy restructuring, Pilgrim’s Pride
sold a majority stake to Brazilian meat company JBS SA
(JBSS3.SA: ).

A year earlier, Pilgrim’s Pride reported a quarterly loss
of $228.78 million, or $3.09 per share, which included $3.7
million in restructuring charges.

And because of its dependency on chicken, the forecast for
a profit at Pilgrim’s Pride was less clear.

“Chicken profitability in late 2009 was a struggle. I think
it is touch and go if the industry will post a profit on
chicken,” Jim Robb, economist at the Livestock Marketing
Information Center.

Corn prices were above $4 per bushel for much of the period
while breast meat prices dropped to near $1 per pound.

“Chicken prices hit their low in October,” said Paul Aho,
economist with the consulting firm Poultry Perspective.


In late 2009, beef and pork processors were mostly
profitable, helped by exports and by better hide and offal
prices, said Robb. Offals are non-meat items such as livers,
tongues, and internal organs, and are generally exported.

“Tyson will certainly be a clear profit,” Rich Nelson.
analyst at Allendale Inc, said, but he said the profits will be
largely in the beef and pork sector.

On average, beef processors earned an estimated $2.27 per
head per week in the quarter, while pork processors earned
$5.48 per head per week, according to

“Beef packer profit margins were estimated to be up 20 to
25 percent in the last three months of 2009 versus 2008,” said
Robb. “Pork profit margins were up an estimated 30 to 35
percent from 2008.”

Analysts on Friday will be anxious to hear any comments
from the companies regarding a resolution to a dispute with
Russia about U.S. chicken.

Russia has been the top export market for U.S. chicken, but
recently banned the meat because U.S. producers use a chlorine
wash, which Russian claim violates its food safety standards.
The two countries have been talking to resolve the issue.

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(Reporting by Bob Burgdorfer; Editing by Bernard Orr)

PREVIEW-Tyson Foods, Pilgrim’s Pride weak link may be chicken