RE/campylobacter in chicken/ As far as I know no one has a test for this. Neog is working on one.
In the WSJ today: (IBP is one of the major meat suppliers)
IBP's Profit Drop 28%
Amid Beef Safety Concerns
By SCOTT KILMAN
Staff Reporter of THE WALL STREET JOURNAL
IBP Inc., stung in part by food-safety scares involving beef, reported that third-quarter net income
unexpectedly dropped 28%.
IBP, of Dakota City, Neb., said it earned $29.1 million, or 31 cents a share, on revenue of $3.42
billion, for the quarter. In the similar 1996 quarter, IBP earned $40.5 million, or 42 cents a share,
on revenue of $3.18 billion.
Wall Street analysts, who had expected the beef and pork processor to earn about 44 cents a share
during the third quarter, said a consumer backlash over an August outbreak of E-coli bacteria in
Hudson Foods Inc. ground beef has helped depress the prices that meatpackers such as IBP are
reaping for their beef products. Beef generates about 80% of IBP's revenue.
Extent of Price Drop
The average wholesale price of beef -- which is what supermarkets pay meatpackers -- has slipped
7% industrywide since the U.S. Agriculture Department ordered a record recall of 25 million pounds
of Hudson Foods hamburger.
IBP and other major slaughterhouses haven't been implicated in the Hudson Foods debacle. But
heightened awareness of E-coli seems to be triggering scares all through the food system. In
September, for example, the South Korean agricultural ministry claimed that it discovered the
dangerous strain of bacteria in a shipment of IBP beef, igniting a trade dispute that is still
simmering between Washington and Seoul.
"The constant drumbeat about food safety is having an impact on consumer demand," said David
Nelson of Credit Suisse First Boston Corp., who participated in a conference call between IBP and
Wall Street analysts. "Beef packing margins have fallen apart over the last few weeks."
Although an IBP spokesman said the impact of the safety concerns is hard to gauge, he
acknowledged that retail demand weakened unexpectedly in the third quarter.
Other Problems
The E-coli scares are bruising a meatpacking industry already struggling with rough business
conditions. IBP's report on Friday marked its fifth consecutive quarterly earnings decline. Tight
hog supplies have swelled IBP's cost of procuring animals for slaughter by so much that it's
considering whether to start raising its own swine. And growing competition from chicken in the
supermarket case is making it hard for red-meat companies to pass along their higher costs to
consumers.
IBP also blamed its earnings decline on the cost of starting up new plants in Canada and South
Carolina. IBP agreed in August to buy the Hudson Foods hamburger-patty plant in Columbus, Neb.,
that was the subject of the national recall. Hudson Foods, which was largely a chicken processor,
then agreed in September to a takeover by poultry rival Tyson Foods Inc.
IBP is installing new food-safety equipment at its slaughtering plants. Among other things, beef
carcasses will now pass through a steam chamber that is designed to reduce the level of
microorganisms on the surface on the meat.
IBP said earnings during the nine-month period dropped 47% to $95.3 million, or $1.01 a share,
from $180.5 million, or $1.87 a share, for the similar 1996 period. Revenue rose 5% to $10 billion
from $9.52 billion for the similar 1996 period.
In trading on the New York Stock Exchange Friday, IBP closed at $24.125, down 62.5 cents.
Best Regards,
Kevin Kramer |
