Tyson Foods Inc., the world's largest meat company, tumbled more than 8 percent Monday after it lowered its earnings forecast for this fiscal year, citing expenses from plant closings and weaker demand for meat because of the discovery of a case of mad cow disease.
The Springdale-based company said it expects to earn between $1.08 and $1.15 per share for the fiscal year ending Oct. 2, down 18 cents a share from its earlier forecast.
Tyson expects to take a charge of 11 cents per share because of charges related to discovery of bovine spongiform encephalopathy in a Washington state cow. No Tyson animal has been found to have mad cow disease but more than 30 countries banned U.S. beef products after the illness was identified late last year, reports ABC News.
According to the Canada Business Centre, Canadian beef producers have faced strict restrictions on exports to the United States since one case of mad cow disease was discovered last year in Alberta.
Beef is Tyson's largest business. For the nine months ended June 26, Tyson had $8.8 billion US in beef sales, compared to sales of $6.1 billion in chicken and $2.1 billion in pork.
Tyson became the world's largest meat company with its 2001 purchase of South Dakota-based meatpacker IBP Inc. for $4.7 billion.
Shares of Tyson plunged $1.40, or 7.9 percent, to $16.37 at 2:05 p.m. in New York Stock Exchange composite trading. A close at that price would mark the biggest one-day decline since March 2003.
Excluding expenses related to mad cow disease and plant closings, Tyson Foods said it will earn $1.26 to $1.33 a share in the current fiscal year. On that basis, analysts expected $1.45, the average of seven estimates in a Thomson Financial survey. A year earlier, net income was 96 cents a share, informs Bloomberg.
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