Bird Flu Alarm

2006-05-02-Bird flu hurting US chicken firms

Understanding Avian Influenza

2006-05-02-Bird flu hurting US chicken firms

Avian influenza, the deadly virus sweeping Asia, Africa and parts of Europe, now is hurting the bottom line of three of America's largest chicken producers.

Tyson Foods Inc., the nation's largest producer of chickens, on Monday reported its largest quarterly loss in more than a decade as concerns about avian flu and mad cow diseases hurt exports.

The company reported it lost $127 million, or 37 cents per share, in the first quarter compared with a net profit of $76 million, or 21 cents per share, in the same period a year ago.

The nation's two other large chicken producers, Pilgrim's Pride Corp. of Pittsburgh, Texas, and Gold Kist Inc. of Atlanta are also expected to report huge losses later this week.

Pilgrim's Pride and Gold Kist are each expected to report losses of as much as 32 cents, according to Thomson Financial.

"It's all chicken pricing and supply and demand," said Greggory Warren, an analyst with Morningstar Inc.

"As irrational as it sounds, fears of bird flu have hurt their sales," he said. "The domestic supply has increased dramatically because they have not been able to export overseas."

Last month Pilgrim's Pride withdrew its guidance for second-quarter and fiscal 2006 financial results as fears of bird flu in Asia affected sales.

David Nelson, an analyst with Credit Suisse, said markets appeared to be stabilizing but a recovery in sales "is likely to be gradual."

Shares of all three companies are trading at nearly 50 percent below the level at which they traded a year ago. Tyson closed Monday at $14.71, up 11 cents, on the New York Stock Exchange. But that is 26 percent below the $19.91 high recorded July 15.

Pilgrim's Pride closed at $25.87, down 26 cents, on the NYSE and down 35 percent from its 52-week high of $40.23 reached July 11. Gold Kist shares closed at $12.91, down 48 cents on the Nasdaq stock market and down 46 percent from its 52-week high of $23.95 reached July 8.

Avian flu has been detected in a number of European countries, including the United Kingdom, which announced last week that chickens found dead recently in that country were infected with H7N3 avian influenza virus, rather than the H5N1 virus that scientists fear could cause a pandemic.

The H5N1 virus has killed at least 113 people worldwide since 2004, according to the World Health Organization.

The virus has the potential to kill millions of people if it mutates to allow human-to-human transmission.

Announcement of Tyson's results came as New Jersey officials reported that a chicken at a live-bird market in Camden County tested positive for a strain of avian influenza. Preliminary testing indicated it was not a variant of the N1 virus found in the H5N1 virus.

New Jersey agriculture officials said the U.S. Department of Agriculture is conducting testing to determine the strain of avian flu with which the bird was infected.

Understanding Avian Influenza