United States-Tyson Foods Inc dissapointing quarter.

UNITED STATES.TYSONS FOODS INC. LOSS FOR QUARTER.

Tyson Foods Inc. (TSN) swung to a fiscal first-quarter loss on slumping margins and a 2.7% drop in volume as the company said its struggling chicken segment has begun to improve.

The world’s largest meat processor has been hurt by surging feed costs, especially at its chicken business. But now slumping demand is pressuring results.

For the period ended Dec. 27, Tyson posted a net loss of $112 million, or 30 cents a share, compared with year-earlier net income of $34 million, or 10 cents a share. Revenue increased 0.7% to $6.52 billion.

The company warned in November that it could swing to a loss in its fiscal first quarter amid the weakening global economy, the strengthening dollar and the volatile commodity markets. Analysts polled by Thomson Reuters most recently expected a loss of 23 cents a share on revenue of $6.82 billion.

Gross margin slumped to 0.3% from 4.9%.

Former Chief Executive Dick Bond left earlier this month after less than three years amid internal tensions over how to navigate the meat industry slump. The move followed months of increased involvement in the company’s daily affairs by Don Tyson, the founder’s son, who controls nearly 70% of the voting shares in the company. Former Chairman and CEO Leland Tollett agreed to return as interim president and CEO.

Tollett said Monday the chicken segment’s fundamentals are improving. The company cut production by 5% last month as demand began to slow noticeably. Chicken sales rose 6.3% as the segment swung to a loss on a $197 million hedging loss and $183 million in increased grains costs.

Beef sales slid 6.9% on an 11% volume decline as the segment clawed back to break-even. Pork and prepared-food revenue rose 5% and 10%, respectively, as profits fell 30% and were flat.

In November, Moody’s Investors Services cut its ratings on Tyson further into junk territory due to concerns the company wouldn’t be able to turn around its chicken operations in the short term. Tyson has bought time by securing eased debt covenants from lenders, but its strategy of not cutting production is viewed as risky given the market’s softness.