June 19th,2008
Fitch Ratings downgraded the company’s status to “junk”. Fitch said that the chicken processor’s credit statistics will likely deteriorate in the near term as a result lower-than-anticipated operating earnings, with increased grain costs and pricing issues expected to hamper the bottom line. This prompted the agency to cut Tyson’s issuer-default rating one notch from BBB-to BB+. Fitch cautioned of the potential for further downgrades should Tyson experience an extended period of high leveraging. Tyson has indeed witnessed tough times, largely on account of macroeconomic headwinds –this latest development should only serve to make matters worse.
Cash Flow Deteriorates
The company reported a 58% decline in consolidated cash flows over the first half of F08, attributed primarily to rising grain costs and inventory requirements. In April, the company swung to a second-quarter loss as a result of restructuring costs and further feed-expense issues.