February 7, 2011

Tyson Foods reports 86% jump in Q1 profits

Tyson Foods' earnings jumped 86% in the first quarter of the fiscal year, aided by improving chicken sales and rising beef and pork prices, the meat producer said Friday (Feb 4).

Tyson shares climbed 8% to US$18.95 in premarket trading Friday (Feb 4).

The improvement is a strong signal the meat producer, based in Springdale, Ark., has recovered from an industry downturn brought on by a combination of higher production costs and slumping demand as shoppers cut spending.

Net income climbed to US$298 million, or US$0.78 per share, in the three months ended January 1. That's up from US$160 million, or US$0.42 per share, a year earlier.

Even excluding a one-time gain of US$0.03 per share related to an asset sale, earnings topped the average forecast from analysts surveyed by FactSet of US$0.62 per share. Tyson Foods Inc.'s revenue climbed 15% to US$7.62 billion. Analysts expected US$7.16 billion.

Results improved across all segments, including chicken, beef and pork. The average price of chicken fell less than 1%, but that was offset by a 16% increase in beef prices and a nearly 24% rise in pork prices.

Chicken volume rose 8%, beef volume edged up nearly 1% and pork volume rose about 6%.

In 2011, the company expects its production to increase slightly, but not outpace export growth. That means total US supply should fall slightly, it said, which means helps the prices Tyson gets for fresh meat.

Tyson Foods expects chicken production will fall slightly to match supply with customer demand. Rising grain prices will be offset by cost cuts.

Beef supplies will fall 1-2% in fiscal 2011, and pork supply is expected to be even with 2010.