Tyson Foods' Q2 tops estimates on higher meat prices

Tyson Foods Inc. the largest US meat producer, reported a second-quarter profit that topped analysts' estimates as shrinking protein supplies boosted chicken and pork prices.

Net income was US$159 million, or 42 cents a share, compared with a net loss of US$119 million, or 32 cents, a year earlier, Springdale, Arkansas-based Tyson said. The average estimate of 12 analysts was 35 cents. Sales in the three months through April 3 rose 9.7% to US$6.92 billion.

Tyson, led by chief executive officer Donnie Smith, is benefitting from higher prices after volatile feed costs prompted producers to cut herds and flocks. Supplies of the four major protein groups shrank last year and will fall again in 2010, the first two-year drop in 40 years, Tyson said.

The company said it bought back or retired more than US$450 million of debt in the quarter. The total was much more than expected, Goldman said, without providing his target.

Tyson rose 65 cents, or 3.5%, to US$19.27 at 9:36 a.m. in New York Stock Exchange composite trading. The shares climbed 52% this year before today.

Average chicken sales prices rose 10% from a year earlier, helping revenue in the unit increase 5.6% to US$2.49 billion, Tyson said. Operating profit from chicken was US$114 million, compared with a US$46 million loss a year earlier.

Pork sales increased 10% to US$929 million, helped by a 15% gain in prices. Operating profit more than doubled to US$69 million; while beef sales rose 14% to US$2.76 billion and operating profit increased more than fourfold to US$126 million.

Tyson will have adequate beef and pork for processing even though cattle and hog supplies will be lower, the company said.

Tyson has been focusing on increasing the efficiency of its chicken segment and said today it expects seasonal demand, higher prices and lower grain costs to aid the unit.