LITTLE ROCK—Tyson Foods Inc., the world’s largest meat company, saw its third-quarter profits nearly obliterated because of skyrocketing grain costs and said Monday that it may be another quarter before the worst is over for its chicken division.

The company earned $9 million, or 3 cents per share in the three months ended June 30, down from $111 million, or 31 cents per share, in the same quarter last year. Revenue rose to $6.8 billion from $6.6 billion.

Excluding items, the company lost 1 cent per share in the third quarter, after earning 32 cents a year earlier.

A survey by Thomson Financial, which generally excludes one-time items, showed analysts expected Tyson to earn 12 cents per share on revenue of $6.99 billion.

Tyson shares dropped 93 cents, or almost 6 percent, to $15.30 on Monday.

Though analysts said conditions are improving a little, Springdale-based Tyson expects overall costs to rise an estimated $1 billion this year because of sharply higher costs for grain and other staples. Grain costs with which to feed chickens rose $140 million in the quarter, and are expected to jump $550 million for all of this year, the company said.

Chief Executive Richard L. Bond said in a call with investors that Tyson’s chicken business would need another quarter to revive.

“Through (fiscal 2009) you will see our chicken business incrementally get better,” Bond said.

Analyst Joseph Agnese with Standard & Poor’s Equity Research, said in a note that he expects the fourth quarter to be worse for Tyson but conditions should improve from there.

“We see significant improvement in (fiscal year 2009) as supply levels improve and prices strengthen,” Agnese wrote. But he cut estimated earnings for Tyson from 35 to 10 cents per share for the fourth quarter and to $1.00 from $1.15 for fiscal 2009.

Bond said he believes the corn crop will surpass government estimates, helping take pressure off of buyers such as Tyson. The company will also be renegotiating contracts with its major customers, many of whom are paying bargain prices under contracts agreed to before grain prices rose so steeply.

Tyson also anticipates more improvement in the beef business, Bond said. He noted that South Korea is again buying Tyson beef and that pork exports are strong, especially in sales to Japan, helped by the weak dollar.

Analysts expect corn prices, down from $8 per bushel to about $6 per bushel, to stabilize but not return to the low levels of a few years ago.

“People will have to pay higher prices and they’ll have to get used to it,” said senior broker Lawrence Baer of the Zaner Group LLC in Chicago. “Eventually, (food producing companies) are going to make a profit or they’re going to be out of business.”

Corn prices had gone so high that ethanol producers were having trouble getting corn they could afford. That situation has calmed, and ethanol-related demand is being restored. But there are other factors—including more demand from places like China and India as people eat more meat— that will keep corn prices from falling back to $2 per bushel.

An abundant corn crop could also help drive prices down. Because of spring floods and the resulting late planting, the government still has not released its assessment of how many acres are planted with corn, said Brian Rylund, a market analyst at St. Paul, Minn.-based Country Hedging Inc. Normally that information is available in late June, but won’t be released until August this year.

“If you’re looking at the condition reports, the crop does look like it’s getting bigger,” Rylund said. But growers aren’t done worrying. Summer temperatures could become too hot or an early freeze could occur.

Bond said Tyson is acting on the belief that profits will soon improve.

“We’re coming close to the end of the really, really hard times,” Bond said, ”and that’s how we’re going to operate.”